The Green Deal was the EU’s biggest project in the Parliament’s current legislative period. Its sensible philosophy was that environmental pollution should cost companies and consumers something. But the plan has slipped out of the EU’s control.
Life is becoming more expensive than it was before. When EU Commission President Ursula von der Leyen launched the so-called Green Deal at the end of 2019, most people probably ignored the fact that the ecological transition would cost a lot of money. However, consumers and companies have now become aware of this: The Green Deal is the most costly and radical project that the EU has initiated in the Parliament’s current legislative period.
For this reason, farmers and industry representatives have recently protested strongly against the Green Deal. As a result, many environmental requirements have been weakened by the Commission and the member states.
The Green Party on the rise
The Greens were the winners of the 2019 EU elections. Never before had they been able to send so many representatives to Brussels. Ecological issues, especially climate protection, were now becoming more important, the media wrote at the time. When von der Leyen presented the European Climate Law in December 2019, she compared it to the first manned moon landing in 1969. “I am convinced that the Green Deal is a great opportunity for Europe – also economically and socially,” said the Commission President. She promised a huge boost in innovation.
The European Climate Law requires climate neutrality by 2050. From then on, industry and households will only be allowed to emit as much carbon dioxide and other greenhouse gases as can be absorbed from the atmosphere using technical and natural means. 50 individual measures and numerous laws are intended to help the plan achieve a breakthrough. The “Fit for 55” package also defines an interim target. By 2030, emissions are to be reduced by 55 percent compared to 1990 levels.
But the project has now stalled. For a highly industrialised continent like Europe, whose inhabitants have become accustomed to a lavish lifestyle, the Green Deal has turned out to be a very ambitious undertaking.
The measures taken by member states were not sufficient to reduce greenhouse gas emissions by 2030 as planned, the Commission said last December. So some countries are lagging behind, but the Commission has not been particularly steadfast either when the Green Deal faced increasing resistance.
Von der Leyen spares the farmers
The protests by farmers were particularly fierce. Last winter they demonstrated almost everywhere in Europe. This alarmed the European People’s Party (EPP) in particular. It sees farmers as an important voting group and fears that they will defect to right-wing parties in large numbers if they are burdened with too much in terms of environmental protection. At the beginning of the year, EPP representatives therefore put pressure on von der Leyen, who is also a member of the party. They demanded that farmers should not be treated too harshly.
The lobbying has worked. Contrary to what was planned, agriculture does not have to halve the use of pesticides, for example. The EU wanted to improve the quality of soil and groundwater. The industry is also not being forced to meet a specific reduction target for greenhouse gases. “Our farmers deserve to be heard,” said von der Leyen.
Industry has also become increasingly dissatisfied. Since the beginning of the war in Ukraine, it has suffered from having to pay more for energy than its competitors in the USA and China. In their view, expensive environmental measures that involve a lot of bureaucracy are not an option.
Fierce conflicts arose, for example, over the questions of which companies the supply chain law should apply to and whether only electric cars should be allowed to be registered in the EU from 2035. The administratively complex supply chain law was subsequently streamlined somewhat. The 2035 deadline for the “end of combustion engines” still applies, however – at least provisionally and with exceptions. In 2026, the Commission plans to take stock of the law. In addition, cars that run on e-fuels, i.e. synthetic fuels, should also be allowed to be put into operation after 2035.
Environmental pollution has a price
Conflicts are also inevitable because of the pricing of greenhouse gas emissions. Economists credit the EU with wanting to achieve decarbonization using a market-based instrument: emissions trading. Companies that use CO2 and other greenhouse gases must buy certificates for them. This is intended to encourage them to produce in the most environmentally friendly way possible.
So far, only certain industries are obliged to participate in emissions trading. However, the EU plans to gradually expand the system. The decision that from 2027, traders of heating oil, petrol and diesel will also have to pay for the greenhouse gases emitted is controversial. Living and driving are likely to become more expensive in the EU, because sellers of fuels and energy will try to pass the higher costs on to consumers.
Complaints that the Green Deal will make everyday life more expensive for “ordinary citizens” are likely to become even louder. However, the EU is aware of how explosive the expansion of emissions trading to the politically sensitive issues of housing and transport is. It therefore wants to create a climate and social fund worth 65 billion euros to provide financial support to households with low purchasing power between 2026 and 2032.
The Green Deal will remain an issue
The EU’s great misfortune is that it is the only economic bloc that wants to achieve decarbonisation using a market-based instrument.
China and the USA, on the other hand, rely on subsidies, for example for the producers of wind turbines, semiconductors, electric cars and solar modules. In the USA, there is a law with the misleading title “Inflation Reduction Act” that provides high subsidies for industry in the name of climate policy.
This puts European companies at a competitive disadvantage. To avoid having to relocate their factories to other regions, the EU is currently introducing the CO2-Carbon Border Adjustment Mechanism (CBAM). From 2026 onwards, companies outside the EU will have to pay an import tax to offset the costs of climate taxes incurred by competitors within the union.
This is not a cause for celebration among European companies. Importers, for example, have to prove which emissions were generated during the production of purchased goods. This also feeds the widespread opinion that the Green Deal is too bureaucratic and too costly.
The climate law will therefore continue to be a topic of discussion in the new legislative period. And the party that is ideologically closest to the climate law is likely to achieve a poor election result in June. According to forecasts, the Greens will be the big losers in the election, unlike in 2019.