Unpacking the climate announcements in the State of the European Union 2023
Last month, Commission President von der Leyen delivered her final state of the European Union address before the 2024 European elections. von der Leyen centered the climate-focused legacy of her term but stressed that the EU still needs to “finish the job” of the European Green Deal.
The speech came at a time where the von der Leyen Commission is undergoing considerable change, with both Executive Vice President Frans Timmermans – architect of the European Green Deal – and Commissioner Mariya Gabriel stepping down in the past few months in order to return to national politics, while Executive Vice President Margrethe Vestager has gone on leave to run for presidency of the European Investment Bank. Against this backdrop, and in light of a major shift in national polls that threatens to shake up the existing balance of power in the European Parliament, many onlookers approached von der Leyen a glimpse ahead at the possible agenda of the next Commission.
“This speech comes at a time where the EU faces strong macroeconomic, geopolitical and political headwinds that are expected to impact its ability to deliver on its climate targets,” said Lee Beck, Senior Director, Europe and Middle East at Clean Air Task Force. “Commission President von der Leyen deftly reframed climate within this context, but ultimately the question will be whether policymakers can offer solutions that marry climate action with economic growth and energy security.”
CATF experts have picked out three key themes from this speech and related Commission materials that can help us understand and shape the European climate agenda in the coming months – and perhaps in the next legislative term.
1. The European Green Deal is only just getting started
When it comes to the European Green Deal: We stay the course. We stay ambitious. We stick to our growth strategy.
Commission President von der Leyen
Despite a recent public cooling on aspects of the European Green Deal from parts of von der Leyen’s own political group, she personally reaffirmed her commitment to this vision beyond the already agreed Fit For 55 legislative package. Her rhetoric here was striking. She referenced the manifest impacts of climate change – from wildfires to floods and record summer temperatures – and spoke about “the reality of a boiling planet.”
It’s important to remember that the Fit For 55 legislation is just the beginning of the European Green Deal. Indeed, this opening salvo is still not yet finished as we still have outstanding proposals like the EU Methane Regulation for the energy sector, the Carbon Removal Certification Framework, the CO2 standards for heavy-duty vehicles, among many others.
Once passed, Fit For 55 also needs to be effectively implemented. The upcoming Communication on the EU climate targets for 2040 is key in this respect – these targets need to be ambitious enough to enable the ultimate goal of climate neutrality – and need to be accompanied by plans that will support actual technology deployment to deliver them. Ultimately, all targets have yet to be achieved and we are not on track to achieve them. To deliver on the ambition, the next Commission needs to deliver a comprehensive, options-based strategy that will be resilient to multifaceted risk.
The bottom line: We cannot run out of steam when we’re only just getting started – the EU has not yet delivered the European Green Deal.
2. The climate agenda = the economic agenda
The European Green Deal was born out of this necessity to protect our planet. But it was also designed as an opportunity to preserve our future prosperity…We now have a European Green Deal as the centrepiece of our economy and unmatched in ambition.
Commission President von der Leyen
Von der Leyen explicitly framed the EU’s climate strategy as its economic growth strategy, “an opportunity to preserve our future prosperity” and providing “a clear sense of direction for investment and innovation.” Doubtless, this is a smart political gambit, but it’s also a foundational fact about what will make or break a truly successful clean transformation: it must strive to deliver benefits for European economies, industries, and citizens.
To scale up and deploy the different clean technologies that we will need – we need bespoke strategies for their development and deployment. This portfolio of technologies will also need substantial funding – public and private – and tailored financing mechanisms that enable efficient allocation. President von der Leyen underscored the role of the newly proposed STEP Regulation (Strategic Technologies for Europe Platform) as an enabler of European Leadership on critical technologies. The Commission made a choice to propose STEP in order to streamline existing instruments so they are aligned with the current EU priories and allow for blending of different resources.
While the proposal is a necessary step in the right direction, more funds need to be leveraged to fulfill the Union’s objectives. The Commission estimates that in order to boost EU manufacturing market shares of net-zero technologies, accumulated investment needs amount to around EUR 92 billion over the period 2023-2030. Better coordination and increased transparency between EU-level funding and Member States’ subsidies is needed to outline the amount of funding each of the EU strategic net-zero technologies could get at the different technology readiness levels. Clear estimates of how much the EU and its Member States spend per technology and across its readiness level will attract investments and allow for tracking progress.
Ultimately, the competitiveness of European industries hinges on the availability of ample, affordable 24/7 clean energy. To provide that, and so guarantee the ever-elusive energy security, the EU needs to pursue all the promising energy- and electricity-generation pathways, including nuclear fission, fusion, and superhot rock geothermal.
The bottom line: The EU needs bespoke decarbonisation strategies for specific sectors, anchored in the availability of clean firm power.
3. The global race for clean tech production is a race to the top
From wind to steel, from batteries to electric vehicles, our ambition is crystal clear: The future of our clean tech industry has to be made in Europe.
Commission President von der Leyen
One of the major climate storylines in Brussels this year has been around the impact of the U.S. Inflation Reduction Act. The Net Zero Industry Act has been billed as a response to this turn to industrial policy in Washington D.C. but von der Leyen was quick to stress that the EU wasn’t looking to one-up its rivals when it comes to clean technology: “Europe is open for competition. Not for a race to the bottom.” In fact, she named the U.S., Australia and Japan as key partners – countries from which there is plenty to learn for European policymakers.
While trade challenges persist – most notably in relation to manufacturing might of China as well the chronic need to import raw materials into Europe – the EU should focus on how to effectively incentivise clean tech production at home in order to strengthen the posture of its industries, increase competitiveness and meet climate targets. To remain competitive in world that has embarked on a clean tech race, the EU needs to assess its business case for clean tech outlined a recent CATF report. President von der Leyen stressed that EU solar and wind industries have lost competitiveness as they were faced with Chinese subsides. However, when it comes to cutting-edge clean technologies such as next-generation nuclear energy, carbon capture and storage, and climate-beneficial zero-carbon fuels, the EU can still lead in innovation and deployment.
Thus, to successfully fulfil targets, policies need to support these technologies in moving from research and development to early commercialisation and expansion.
The bottom line: In the face of (unfair) competition, the EU must double down on domestic incentives and productive partnership-building.
“It cannot be stressed enough that there is still much for this Commission to get done when it comes to climate policy,” said Alessia Virone, Government Affairs Director, Europe at Clean Air Task Force. “EU leaders cannot hide behind changes in personnel while big-ticket emissions reduction measures are still on the table – there is a lot of work to be done before we enter the 2024 election cycle.”
With many commentators predicting von der Leyen will run once again for the role of Commission President, this speech steadied the ship amongst some choppy waters. With growing dissatisfaction among von der Leyen grouping and the loss of the Commission’s most high-profile climate champion, there were concerns that the days of climate issues taking centre stage in Brussels may be behind us – this speech was aimed partly at addressing such concerns.
What the von der Leyen Commission has achieved on climate is remarkable, and can sometimes be taken for granted after four years of dedicated focus – it is important commentators don’t lose sight of that. But, crucially, an excellent start will not be sufficient to reach climate neutrality. Recognition at the highest level that the job is not finished is an encouraging baseline for more climate focus in 2024 and beyond.
