EU Leaders Face Pressure to Maintain Green Agenda Amid Economic Concerns
Campaigners from the Climate Action Network, a pan-European coalition of NGOs, have issued a stark warning to EU leaders ahead of a summit focused on reviving the bloc's struggling economy. They argue that European industry is "under real pressure" from factors such as high energy prices, ageing infrastructure, global overcapacity, and delayed investments. However, they insist these challenges cannot be resolved by diluting climate and environmental policies.
Industrial Strategy Must Not Rely on Deregulation
In an open letter, the group emphasised that "deregulation is not an industrial strategy." They contend that the difficulties facing energy-intensive sectors like steel, cement, and chemicals are primarily driven by fossil fuel-derived energy prices and global market dynamics, rather than environmental regulations. This intervention comes as the EU economy faces ongoing pressures, including trade tensions with the US under Donald Trump's tariff policies.
Last week, European Central Bank President Christine Lagarde noted that the eurozone economy "remains resilient in a challenging environment," but acknowledged the outlook is "uncertain" as interest rates were left unchanged. EU leaders are scheduled to meet at a chateau in eastern Belgium on Thursday to discuss the "urgent strategic imperative" of strengthening the single market, according to European Council President António Costa.
Von der Leyen's Industrial Initiatives and Regulatory Proposals
A day before this summit, European Commission President Ursula von der Leyen will convene with industry leaders in Antwerp. This follows a 2024 summit in the Flemish city where business executives called for a European industrial deal to complement the EU's green deal, along with "corrective measures" on existing regulations. In response, von der Leyen's commission has put forward ten "omnibus" proposals aimed at loosening regulations across various economic sectors, including automotive, digital, defence, chemicals, and farming.
However, green campaigners caution that this deregulation agenda could undermine the EU's carbon pricing mechanism and other policies supporting the energy transition. Their letter states, "Without a strong and predictable carbon price, the business case for clean steel, green chemicals, circular materials, and electrified industrial production collapses – and with it, the effectiveness of future industrial policy tools."
Slow Progress on Economic Revival and Internal Barriers
This warning coincides with a report from the European Policy Innovation Council, which found that only 15% of the recommendations from Mario Draghi's landmark 2024 report have been implemented. Draghi, a former Italian prime minister and ECB president, outlined 383 recommendations for EU institutions and member states, warning that without measures like an annual €800 billion investment drive, the EU risks a "slow and agonising decline."
The centrist Renew group in the European Parliament expressed concern over the sluggish implementation of Draghi's agenda, highlighting numerous internal hurdles within the EU single market. Citing International Monetary Fund research, they noted that EU regulatory barriers are equivalent to a 44% tariff on goods and 110% on services. The group remarked, "While we are rightly horrified by the prospects of new US tariffs, we seem to be strangely complacent about the 'internal tariffs' we self-inflict. We are in effect sanctioning our own economy."
Upcoming Industrial Accelerator Act and Clean Tech Focus
In an effort to stimulate Europe's stagnant economy, the commission is set to publish an Industrial Accelerator Act in the coming weeks. This legislation is expected to include proposals to boost clean technology and introduce a "buy European" preference in strategic sectors, aiming to foster economic growth while maintaining environmental commitments.
