2025 may well go down in history as the year the Green Deal broke in Europe. As 2026 approaches, Brussels has arrived at a situation that could be described as a “bleak reality”. This has come about both because of pressure from the administration of US President Trump and because of the results of the 2024 European Union Parliament elections. Europe cannot go on pursuing a policy that undermines its competitiveness in the world. It has become clear that the European Union is beginning to move backwards on climate matters.
After the “triumphal march” of climate policy during her first term, when the European Union adopted the most ambitious package of climate laws in history, European Commission President Ursula von der Leyen is now quite visibly retreating from the unyielding position she previously expressed. It is plain to see that the Green Deal is being put on the brakes and that a move backwards has begun. The Commission has already announced the possible withdrawal of the planned Green Claims Directive and has scrapped the regulation on the sustainable use of pesticides. The EU Deforestation Regulation has been postponed indefinitely. The Omnibus package proposed by the EC – a promise also made to D. Trump in the European–US trade agreement concluded in January – weakens the recently adopted sustainability reporting rules for companies, even though the EU Parliament only very recently rejected this proposal in a first vote.
At last week's European Council summit, Europe's leaders opened the way for the proposed 2040 emissions reduction target. That happened, however, only after the EC promised to ease the existing European climate laws. The summit also discussed the 2035 deadline for phasing out new internal combustion engine cars, which was Germany's central demand. The Germans are fighting hard for the interests of their car industry, despite the rather dramatic situation it has found itself in as a result of China's expansion in car manufacturing across the world. This problem is of course deepened by Green Deal policy with all its side effects. On the international stage, European Union politicians arrived at Climate Week in New York last month, in effect, “empty-handed”.
It can be argued that the change was already apparent at the beginning of this year, when the European Commission renamed the Green Deal the “Clean Industrial Deal”. The EC maintains that this is the next stage, in which climate matters will be balanced against concerns about Europe's competitiveness. Climate activist organisations, meanwhile, loudly and hysterically declare that these changes amount to the destruction of the European Union's climate laws.
The 2026 Climate Programme
In October the European Commission announced its Work Programme for 2026. In the field of climate legislation, a package of documents on strengthening energy security can be expected in the first quarter of the year. The third quarter should bring a proposal on circular economy legislation, a proposal on simplifying the electrification process, as well as a review of the ETS rules in the maritime and aviation sectors and a review of the market stability reserve. This quarter's overall package of measures will also include a review of Energy Union governance, the CO₂ transport market, the post-2030 energy efficiency framework, renewable energy rules and the climate adaptation plan. In the fourth quarter there are plans to update the systems for sharing out the effort of reducing greenhouse gas emissions in sectors not covered by the ETS, as well as in the LULUCF sector (land use, land use change and forestry). Many of these reforms are necessary in order to reach the 2040 target, if it is not changed...
The 2035 and 2040 targets once again
The European Union nevertheless missed the UN deadline for submitting its climate plan as part of the Paris Agreement – its nationally determined contributions (NDC). Agreement on new emissions reduction targets for 2035 and 2040 in Europe was delayed. The governments of several EU member states, including France, have warned that geopolitical and economic threats mean that the 2040 target – a 90% reduction compared with 1990 levels – should be dropped or scaled back. The question was referred to the heads of state and government, who broadly supported the target. That happened only after the European Commission promised both to review Europe's climate legislation and to introduce a so-called review clause. After the meeting, Polish Prime Minister Donald Tusk called it a “turning point” in the European Union's approach to climate policy, stressing that: “Europe is finally speaking our language.” Climate activists, of course, reacted in various ways. “Some of the measures and the proposed ‘flexibilities' are still fairly unclear, which could jeopardise the integrity of European climate action if they are not carefully constrained,” said Jens Mathias Clausen, director of the Danish think tank CONCITO . At the same time, representatives of climate organisations welcomed the fact that EU leaders instructed climate ministers to adopt the climate targets at the ministers' meeting on 4 November. The meeting will take place a few days before COP30 begins.
The Carbon Border Adjustment Mechanism deadline approaches
The European Union's new Carbon Border Adjustment Mechanism (CBAM), under which importers must pay if their products have a larger carbon footprint than those of European manufacturers, will enter into force on 1 January 2026. Industry associations in Brussels warn that they do not have enough information about how this mechanism will work. The European Commission, for its part, is trying to allay the concern, pointing out that this is only the start of a gradual process. “CBAM will enter into force on 1 January 2026, but will begin operating when the first declarations are received in mid-2027,” Maria-Elena Scoppio, Director of the European Commission's taxation department, stressed at a meeting held in Brussels in October. Various elements of the Carbon Border Adjustment Mechanism will be tested and refined by mid-2027. It was noted that by the end of this year the EC plans to develop an idea for protecting European Union exports from climate-unfriendly competition on the world market that is not covered by CBAM.
Problems with the Emissions Trading System
Last week the agenda included the new Emissions Trading System (ETS) for transport and buildings. Several countries announced that they want it postponed or scrapped altogether. At the start of the week, at the meeting of environment ministers, EU Energy Commissioner Wopke Hoekstra reported on four changes intended to address the problems in extending emissions trading: reform of the ETS2 market stability reserve to promote greater price stability, making ETS2 revenue available sooner than planned in 2026, European Investment Bank funding for measures to green transport and buildings, and Social Climate Fund support to help low-income households pay their energy bills. That was enough to save ETS2 in this situation. The European Commission additionally undertook to review it and to add a review clause.
Weakening the climate laws
The US administration continues to demand that Europe amend its climate laws. In October an open letter appeared in which the Americans warn of economic consequences if the European Union applies the law on corporate sustainability reporting. The European Commission showed that it is ready to amend the laws when it signed an agreement between the EU and the US in Scotland in July, explicitly offering to amend three climate laws that the US has “concerns” about. The first is the Carbon Border Adjustment Mechanism (CBAM), designed to impose a carbon tariff on companies from countries with less stringent climate legislation in order to combat carbon leakage. The second is the Corporate Sustainability Due Diligence Directive (CSDDD)/Corporate Sustainability Reporting Directive (CSRD), which requires companies operating in Europe (American ones included) to report on their climate impact. The agreement promises a review of EU vehicle registration legislation so that large pickup trucks can be imported into Europe, according to the transport NGO T&E.
The Americans want shipping excluded from the Emissions Trading System
Very recently the US managed to wreck the International Maritime Organization's agreement on reducing shipping emissions. The vote has technically been postponed until next year, but experts believe the agreement is almost certainly unworkable. The US government is putting ever greater pressure on the EU to abandon its climate commitments in this sector. The leadership of the green transport organisation T&E notes that the US administration is forcing Europe to abandon the so-called Green Shipping measures. “This is a brazen attempt to undermine European sovereignty,” stressed T&E Executive Director William Todts. It is clear that the so-called most significant climate law in world history under previous US President Joe Biden, the US IRA, has been erased entirely with the passage of President Donald Trump's One Big Beautiful Bill Act.