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EU elections unpacked: Does the Green Deal have a future?


‘The ambitious regulatory regime that underpins the European Green Deal poses plenty of opportunities and challenges for companies. Our Freshfields ESG and Sustainability team is increasingly supporting clients to help them understand the new legal provisions, assess new business opportunities in the clean energy transition, as well as mitigate against any risk of litigation.’

Prof. Dr. Juliane Hilf, Partner
Disputes Resolution regulatory lead in Continental Europe

Europe on the path to climate neutrality by 2050

With a firm ambition to reach climate neutrality by 2050, European Commission President Ursula Von der Leyen launched her mandate in charge of the European Commission in 2019 to great fanfare. Her flagship European Green Deal created a legal commitment for the EU and its Member States to become the first net-zero continent by 2050. The Green Deal orchestrated a raft of proposals to revise and create new laws targeting emission reduction efforts across all sectors. Action plans on chemicals, circular economy, transport and farming featured plenty of ambitious initiatives to ensure all sectors of society play their part in protecting the planet. For example, the 2021 Fit for 55 Package set a target of achieving at least 55 per cent GHG reductions by 2030 through laws including the revised Renewable Energy and Emissions Trading System directives, and a new Carbon Border Adjustment Mechanism. The majority of these files have now been agreed and are in the process of being transposed at national level, a huge success for Von der Leyen and the Commission.

Is the European Green Deal under threat?

However, fast forward to 2024, and Von der Leyen’s Green Deal is under threat. Following the succession of several crises (COVID-19, the Russian invasion of Ukraine and high energy prices), disagreement on the speed of Europe’s climate transition is fuelling the rise of far-right parties in Europe at the expense of the Greens who did well in the 2019 elections but are now drawing less support from voters. This has led to the watering down or in some cases cancellation of legislative initiatives, particularly files impacting the agriculture and chemicals sectors. The agricultural sector has been one of the most vocal when it comes to attacking the Green Deal, with farmer protests causing chaos in Brussels and other European capitals. Meanwhile, dwindling public funds for the climate transition risk undermining the development of new clean tech in Europe, which could also jeopardise the EU’s global standings as competitors like the US and China ramp up the development of solar, batteries and hydrogen, backed by serious financing.

With all that in mind, counteracting the climate backlash and protecting the EU economy is one of the biggest priorities for the next Commission. We expect to see a new European Industrial Deal to prioritise boosting competitiveness and cutting red tape over introducing more climate-friendly laws. Public funding is expected to prioritise growing threats like defence, meaning money to finance the climate transition will need to be sourced at national level or more likely from private investors.

Sustainability considerations for the 2024-2029 mandate

In the area of energy and climate, we anticipate three key themes:

  • Implementation of the EU’s Fit for 55 Package: the bulk of the EU’s new climate laws need to be transposed into national law by EU Member States (eg revisions to the Renewable Energy and Energy Efficiency Directive). New regulations like the Carbon Border Adjustment Mechanism and Net Zero Industry Act should, if successfully enforced, boost European production of key commodities (eg steel, aluminium) and new clean tech (eg wind turbines, solar photovoltaics) at the expense of foreign producers and importers. Although as mentioned before, implementation is just one element of getting these files off the ground: money will be incredibly important to boost the deployment of technologies and ensure the ambitious climate targets in sectors like transport, electricity generation and buildings can be achieved. Mid-way through the upcoming five-year mandate, some legislation will need to be reviewed already, and we expect some countries and Members of the European Parliament to use this as an opportunity to press pause on some of the more contentious targets, such as the 100 per cent emission reduction target for passenger cars and light commercial vehicles from 2035 laid down in the CO2 regulation for cars and vans.
  • 2040 climate targets: With targets set in stone for 2030 and 2050, EU Member States will need to agree on a new interim target for 2040. Following the publication of the 2040 climate target communication in February 2024 which favoured a 90 per cent target for 2040, the Commission will come forward with a legislative proposal revising the existing European Climate Law in the first half of its new mandate. The 90 per cent target has received a lukewarm response from national governments so far, who will likely avoid talking about it seriously until after the EU elections (6-9 June 2024). Whilst some countries will argue against more strict targets, we anticipate that 90 per cent will be accepted and set into law in 2025-2026.
  • Carbon Capture, Utilisation and Storage: The EU has been slow off the mark when it comes to embracing CCUS compared to other jurisdictions such as the UK, Norway, and the US. A dedicated strategy with a mix of legislative and non-legislative measures to scale-up the deployment of CCUS will be required if hard-to-abate sectors like cement and chemicals are going to manage to reduce their emissions. The Commission gave us a flavour of their growing support for CCUS with the publication of their communication on Industrial Carbon Management in February 2024, but we expect to see more concrete proposals tabled during the next mandate. One issue the Commission may need to tackle is the current carbon price: if carbon prices remain low as they are today, there will be little incentive to invest in expensive CCUS technologies. But increasing carbon prices is politically sensitive and ideally requires an EU-wide approach rather than ad-hoc national actions (eg certain Member States creating a domestic ETS). 

For the circular economy, much progress has been made by the Commission on creating a new blueprint for circularity in product design. Products like textiles and furniture will all face tough new design and information requirements under the Ecodesign Regulation, which will be implemented in the next few years, whilst a new law banning greenwashing will apply from 27 September 2026. The EU’s new deforestation law sets due diligence requirements on the producers of commodities like cocoa and wood (and the products derived from them), which will start to apply at the end of this year. Meanwhile, co-legislators (the European Parliament and Member States in the Council) should finalise agreements on substantiating the use of voluntary green claims used by companies and on new EU packaging rules by the end of 2024. One sector which will face increasing calls to clean up its processes in the next term will be chemicals. Ursula von der Leyen failed to publish a much-anticipated revision of the EU’s lead chemical regulation REACH, and there is a lot of pressure from NGOs and left-leaning politicians to ensure this is published in 2025. The universal PFAS restriction proposal will also be finalised by the European Chemical Agency in 2025-26, which the Commission will then need to decide on. The proposal could ban some 10,000 per-and polyfluoroalkyl substances used in everything from medical products to electronics, and we expect to see a lot of activity from stakeholders to protect PFAS used in critical applications like semiconductors in the coming years. 

The elephant in the room when it comes to decarbonisation, agriculture has so far avoided having to abide by many of the EU’s legislative requirements on emission reductions, despite the sector only achieving modest declines in emissions in recent years. No one can argue that farmers are the backbone of the EU’s economy, and recent protests have seen politicians scrambling to placate their demands to reduce administrative and regulatory burdens placed on Europe’s farms, particularly in an election context. This has led to the shelving of the EU’s Sustainable Use of Pesticides Regulation, whilst the pivotal Nature Restoration Law is now delayed: a provisional agreement was reached on the file in 2023, but due to concerns on the impact for European farmers, the file is unlikely to be adopted in its current form before the EU elections, which suggests rules to set targets to restore the EU’s land and sea areas will be revised or dropped altogether. Whether agriculture will be targeted again for emission reduction once the elections are safely out of the way remains to be seen; ultimately, without emission reductions in activities such cattle farming and forestry in Europe, the EU will not reach its ambitious climate goals, so we expect to see some movement in the next mandate.

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