When the European Union launched its green deal in 2019, putting into law the goal of climate neutrality by the middle of the century, it showed strategic foresight as well as global leadership. Russia’s war in Ukraine has starkly underlined the extent to which the continent’s energy security – and its future prosperity – is dependent on the transition away from fossil fuels. Lately, however, EU leaders’ environmental approach appears to be echoing the youthful St Augustine’s plea on chastity: make us greener, but not yet.
The recent European Industry Summit in Antwerp made unusually big headlines thanks to Sir Jim Ratcliffe’s xenophobic outburst over immigration. But it was also notable for fierce attacks on one of the most important pillars of EU environmental policy. The bloc’s emissions trading system (ETS) – which makes polluters pay for the C02 they emit – has achieved dramatic results in driving down overall emissions since 2005 and encouraging green innovation. Worryingly, the German chancellor, Friedrich Merz, appeared to sympathise with demands from Sir Jim and other CEOs for a radical relaxation of the rules.
There will be much more of this to come. Together with the far-right Italian prime minister, Giorgia Meloni, Mr Merz is championing a deregulatory approach to delivering growth that risks hobbling Europe’s climate ambitions. Ms Meloni has long railed at what she has described as “green follies” imposed by Brussels. In Mr Merz, an economic liberal instinctively hostile to regulation, she has acquired a powerful ally.
The Berlin-Rome axis has already succeeded in diluting plans to ban the sale of new petrol and diesel vehicles by 2035. EU leaders have also voted to scale back overall 2040 targets for greenhouse gas reduction. Corporate sustainability reporting rules have been watered down. Italo-German calls for greater flexibility in achieving decarbonising goals, and attacks on regulatory systems such as the ETS, have the potential to license a full-scale pivot away from net zero targets.
This is disastrously shortsighted from an economic as well as an environmental point of view. When the green deal was launched, it was rightly seen as a means to encourage the changes needed to make economies competitive in a fossil-fuel-free era. Competition from China has underlined the importance of moving faster in this direction. Instead, the rising influence of rightwing populism across the continent is leading to a new go-slow consensus.
As the former head of the European Central Bank Mario Draghi has argued, the true path to future competitiveness lies in sustained investment, partly financed by common EU borrowing, and incorporating a bold green industrial strategy. Mr Merz is right to suggest that, in some areas, a simplification of bureaucratic hurdles could be beneficial for growth. But a blind faith in deregulation, and capitulation to corporate lobbying on environmental rules by the likes of Sir Jim, is not a remotely adequate strategy for the times, ethically or economically.
Given Donald Trump’s ongoing determination to undermine international attempts to combat global heating, Europe’s role as a climate leader is more vital than ever. So too is the need to develop an industrial vision that ensures the continent’s prosperity and security in the long term. As Mr Merz and Ms Meloni manoeuvre, it is time for defenders of the EU’s green deal to stand up and be counted.
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