“Whatever the future may be, it will be electric”
The European Union's fight against the consequences of climate change has created a problem that must be resolved without delay. The proposed amendment to the European Climate Law, which sets out the path for cutting greenhouse gas emissions by 90% by 2040 compared with 1990 levels, has provoked very sharp disagreement in both the European Parliament and the Council. Three months before COP30, the EU's 2040 climate target has become a political “battlefield”, and the outcome remains unclear.
Last month in summary
On the state of the European Union
In her annual State of the EU address on 10 September, Commission President Ursula von der Leyen set out the progress of the Green Deal, stressing that the Green Deal remains, and will remain, the mainstay of Europe's economic sovereignty and a guarantee of its future development. Launching the Affordable small cars initiative, von der Leyen announced the European Commission's support for integrating climate policy into a strategy to cut carbon emissions in European industry and improve its competitiveness.
On the EU's 2040 emissions reduction
The European Parliament Environment Committee's debate of 4 September on the Commission's proposed 90% net emissions cut by 2040 ended without visible majority support. Pro-European parties backed the proposal, putting them at odds with Czech MEP Ondřej Knotek, a member of the far-right parliamentary group “Patriots for Europe” (which also includes France's “National Rally”), who presented the report. The “Patriots for Europe” representative called for the Commission's proposal to be rejected. Internal disagreements within the “European People's Party” (EPP) leave the outcome uncertain. The committee vote is scheduled for 23 September, with the plenary vote due in early October.
On the EU budget
On 16 July the European Commission submitted the seventh draft of the so-called multiannual financial framework (MFF) for the period from 2028 to 2034, pointing to a significant policy shift away from Green Deal priorities and towards competitiveness and defence. While the Commission sought to reassure stakeholders about climate and environmental spending, a group of non-governmental organisations voiced concerns about the process. The proposed budget is 2 trillion euros, a considerable increase on the current 1.211 trillion euros. 35%, or roughly 700 billion euros, of the proposed budget would be set aside for climate and environmental measures. In the current budget period, which ends in 2027, 30% of the 1.211 trillion euros is allocated to climate measures and 10% to environmental measures.
What to watch in European Union policy over the coming weeks
The European Union's Nationally Determined Contributions – NDC (the EU's current headline target is a net reduction of 55% by 2030 compared with 1990 levels. This overall target is backed up by legally binding sectoral policies to ensure it is met) and the 2040 target. Denmark, currently holding the Presidency of the Council of the EU, wants to secure the adoption of Europe's new 2035 climate targets at the next meeting of environment ministers on 18 September, ahead of the COP30 conference in Belém, Brazil, which begins on 10 November. By the end of September the EU must submit its updated joint Nationally Determined Contribution (NDC – Nationally determined contributions) to the UN Framework Convention on Climate Change (UNFCCC). The 2035 target will be integrated into the EU's 2040 climate target, which is currently the subject of difficult negotiations in both the European Parliament and the Council to determine each country's required contribution.
How it works: the EU submits a single climate plan to the UNFCCC, approved by the Council alone – Parliament has no say in this process. The central element of that submission will be the 2035 emissions reduction target, which all 27 member states must agree on by the end of September. The 2040 target, however, is arrived at differently: on 2 July the Commission tabled a proposal in the form of an amendment to the European Climate Law. That draft will then have to be adopted by both co-legislators – the European Parliament and the Council.
Sustainable finance
The deadline for the European Commission to respond to the EU Ombudsman's request for more information about the first Omnibus package of measures expires on 15 September. Following a complaint lodged by eight civil society organisations, European Ombudsman Teresa Anjinho has opened an inquiry into how the Commission prepared the legislative proposal as part of the “Omnibus simplification” package. The eight NGOs claim the Commission has not justified why it did not carry out a public consultation or an impact assessment on the draft legislation. Under the European Climate Law, the Commission was required to carry out a climate consistency assessment. On 26 February 2025 the European Commission tabled an omnibus package of measures that would, in effect, weaken four pieces of legislation already adopted – the Taxonomy Regulation, the Carbon Border Adjustment Mechanism (CBAM), the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The move came after substantial political pressure from France and Germany, and further legislation is expected to be reviewed over the coming months.
The car industry
Europe has for some time faced difficulties in this sector over how EU policy applies to the future direction of car manufacturing. On 12 September the third round of the strategic dialogue on the automotive industry took place at director-general level, covering CO₂ emissions standards for vehicles. The meeting focused on the phase-out of internal combustion engines planned for 2035 and on CO₂ emissions standards for the vehicle fleet, Table Media reports. In an open letter published on 8 September, more than 150 company executives from across Europe's electric vehicle supply chain urged Commission President Ursula von der Leyen “not to back down” from the European Union's 2035 zero-emissions target for cars and vans, and to take bolder steps to secure Europe's leading position in electric mobility. On the other side, the carmakers' lobby ACEAsees this meeting as an opportunity to “review” Europe's common policy, in the light of the German car industry's calls to scrap the target of banning internal combustion engines from 2035.
Science
On 15 September leading European scientists met European Union representatives in Brussels to share the latest climate data. This comes at a time when Europe's leadership is debating the EU's 2040 climate target.
The EU's Copernicus Climate Change Service has tracked “intense global forest fire activity” over the first six months of 2025.
On the new European initiative – “Small, affordable cars”
Ursula von der Leyen will work with car industry leaders to develop a new “E-car” category covering small, affordable cars, in order to help preserve the sector.
In July, Stellantis chairman John Elkann and the then head of Renault Group, Luca de Meo, proposed creating a small car class with simpler safety rules, which would be cheaper to produce and generate fewer emissions over their life cycle. The proposal was based on Japan's so-called “kei” car class, which accounts for roughly 40% of the Japanese domestic market.
In September, at the Munich motor show, car industry leaders including the new head of Renault Group, François Provost, BMW Group chief Oliver Zipse and Stellantis chief Jean-Philippe Imparato called for urgent action on the current European Union rules that will ban the sale of new ICE (internal combustion engine) cars by 2035, arguing that this could harm the European car industry, which faces aggressive competitors such as those from China.
O. Zipse and J.-P. Imparato proposed a plan to assess vehicles' CO₂ emissions over their life cycle, rather than simply measuring tailpipe emissions. Such a step would give carmakers greater freedom to use a range of engines while still reducing CO₂ emissions.
In her annual address, Ursula von der Leyen described the European car industry as “the backbone of our economy and industry”, acknowledging that “millions of jobs depend on it”.
Von der Leyen noted that Europe has already granted flexibility on the 2025 CO₂ targets that carmakers must meet. She added: “In keeping with technology neutrality, we are now preparing for the 2035 review.”
She also voiced support for the proposed “E-car” class, saying: “Millions of Europeans want to buy affordable European cars, so we must also invest in small, affordable vehicles, both for the European market and to meet the rapid growth in demand worldwide. That is why we will propose working with industry to develop a new initiative on small cars that people can afford.
Ursula von der Leyen believes Europe should have its own E-car. E for “environmental” – clean, efficient and light. E for “economical” – affordable for people. E for “European” – made here in Europe, using European supply chains. She also stressed that Europe cannot allow China and others to capture this home market.
It is not yet clear which engine types will be permitted in the new E-car class. Ursula von der Leyen did say, however: “Whatever the future may be, it will be electric, and Europe will be part of it. The future of the car – and the car of the future – must be built in Europe.”