EU faces pressure on Green Deal as elections loom

On February 20, just days before farmers staged a protest in the centre of Brussels to show their resentment of the EU’s green policies, 73 industry leaders from more than 20 industrial sectors came together in the Belgian port of Antwerp to sign a declaration.

That document identifies an “urgent need for clarity, predictability, and confidence in Europe and its industrial policy” and outlines 10 policy areas that the European Commission and member states should address. According to the executives, EU industry is being strangled by bureaucracy, high energy prices, global trade tensions and the cost of transitioning to cleaner practices, to meet the bloc’s climate goals.

“Putting industry competitiveness at the heart of Europe’s decision-making: this is the big elephant in the room,” says Ilham Kadri, president of the EU chemical industry body Cefic, which spearheaded the declaration.

Markus Beyrer, director-general of employers’ organisation Business­Europe, says European industry is in “a very, very serious situation” and losing ground against international competitors in China and the US.

Policymakers’ response to the farmers’ protest — the most recent of a series that has involved manure being spread across the streets of Brussels, statues being toppled, tractors blockading roads, and eggs being hurled at Commission buildings — was rapid.

Environmental standards that farmers must meet in order to receive EU subsidies have been scrapped in some cases, and farms of less than 10 hectares have been exempted from penalties for non-compliance with green rules. These measures were passed by an urgent procedure in the European parliament last month.

By contrast, the response to industry’s concerns has been less clear-cut.

EU leaders discussed the bloc’s economic competitiveness at a summit in April, prompted by the publication of a report on the single market by former Italian premier Enrico Letta. Then, in the summer, another former Italian premier, Mario Draghi, will present a report on competitiveness. In addition, the commission is holding a series of “clean transition dialogues” with industries ranging from hydrogen to steel. But it has run out of time to pass new legislation before EU-wide elections in June.

Speaking about the dialogues at a press conference last month, Maroš Šefčovič, the EU’s Green Deal chief, said “there was a lot of food for thought, because now we are moving to the next phase of the Green Deal.”

He added that this new policy phase should “take into account the technological possibilities, readiness of our industry, huge investments and, of course, support of the member states, and . . . even more importantly, the backing of our citizens for this very important once-in-a-generation transition”.

As a result, the bloc’s Green Deal climate law and its impact has become a key battleground ahead of the summer elections and a defining element of European Commission president Ursula von der Leyen’s effort to win a second term.

Do you really think that if Europe scraps [some] reporting obligations, suddenly European industry is saved? It’s a joke

Liberals in the Czech Republic have warned against a “green ideology” sweeping Europe. Meanwhile, the rightwing European Conservatives and Reformists group has said that the Green Deal has neglected citizens and must be “turned on its head”.

Several key pieces of von der Leyen’s landmark climate legislation have already been scrapped or delayed in the run-up to the elections, including a law to cut pesticides and a revision of rules on chemical use. Reporting obligations have also been watered down.

But Green politicians say that it is crucial to maintain consistency and press ahead with implementing the environmental rules.

“For industry, if there is one thing they need, it is long-term predictability,” said Bas Eickhout, the Dutch lead candidate for the European Greens, at a recent campaign rally. “There is nothing so bad for industry as a European Commission or parliament that changes every five years . . . in our assessment, you need to be much clearer on the future and . . . the stability of the Green Deal that is helping our industry to know where Europe is going,” he argued.

“Do you really think that, if Europe is going to scrap [some of the] reporting obligations, suddenly European industry is saved? It’s a joke,” he concluded.

Business leaders are quick to emphasise that they are not against the EU’s climate goals.

“What we want [the policymakers] to hear, again and again, is that we are all for the Green Deal,” says Kadri.

The problem is making it happen. “When the Green Deal came out [it] framed how we can work towards a net zero Europe,” says Katja Wodjereck, former executive vice-president of renewable products at the Finnish oil and biofuel company Neste. “This was all a fantastic ambition. But how do you get that? How do you get there in a way that is sustainable for businesses to survive?”

Neste has invested millions into developing sustainable aviation fuels and received €135mn from the EU’s Innovation Fund to establish a chemical recycling plant in 2022. However, a lack of regulatory clarity has made scaling up a challenge.

To make significant steps on many of these things you need revision of primary legislation, which is hardly going to happen overnight

Disruptive events, such as the Covid pandemic and Russia’s invasion of Ukraine, have not helped. “We’ve seen crisis over crisis, that led to macroeconomic volatility,” Wodjereck says. “And that makes planning and predictability a lot more difficult than it was before.”

Solutions are not easy, though. The Commission has started to take a tougher stance on Chinese companies operating in the bloc that benefit from Beijing’s vast state subsidies. But other issues that are hampering investment, such as permitting delays for new facilities and difficulties in accessing EU finance, will not be solved before the EU votes in June.

A survey of 240 companies across 21 European countries by Business­Europe found that more than 60 per cent had to wait between one and six years for permitting approvals. Around 80 per cent said that this was an obstacle to investing in the EU.

The lobby group is also pushing for sustainability reporting obligations to be further lightened to cut costs.

“Is there a quick fix? That is the big question,” says Beyrer, the Business­Europe chief. “It is quite difficult to find quick fixes to issues like permitting, energy prices and regulatory costs at a European level because, to make significant steps on many of these things, you need revision of primary legislation, which we know is hardly going to happen overnight.”

But, he urges, policymakers and industry should not give up: “We must find a way to get there.”

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