EU Eases Climate Rules, Boosts Industry Competitiveness

The letter precedes critical discussions among EU heads of state and government regarding the bloc’s post-2030 emission reduction pathway and an environment ministers’ meeting. Critics consistently argue that the previously ambitious 90% emission reduction goal from 1990 levels by 2040 negatively impacts industrial competitiveness.

Von der Leyen indicated a potential weakening of the 2040 target by allowing increased use of international credits, which currently account for only 3% of reductions. This mechanism involves paying other countries to cut emissions, counting them as EU reductions.

She also suggested that companies covered by the Emissions Trading System (ETS) can utilize "industrial carbon removals," such as carbon capture and storage, to meet decarbonization trajectories. For the automotive industry, the Commission President opened the door to "advanced biofuels" made from waste, though their use beyond the 2035 cut-off for polluting engines remains unconfirmed, pending a fuel assessment beyond 2030.

Addressing concerns about the new ETS2 carbon pricing system for transport and heating fuels, von der Leyen stated that EU Climate Commissioner Wopke Hoekstra will present new proposals to mitigate high and volatile CO2 prices. The Commission will also explore "front loading" expected future revenues to ease market impact.

She affirmed the Commission's commitment to cutting energy prices in the short term, advocating for electrification and urging EU capitals to reduce electricity taxes. Von der Leyen maintains that a market-based approach is correct for modernizing sectors and emphasizes clean technology as a major business opportunity requiring "unrelenting drive" against competitors.