Meeting in Council on Thursday 27 March, the European environment ministers discussed the environmental aspect of the ‘Clean Industrial Deal’ proposed by the European Commission in its ‘Competitiveness Compass’.
2040 target. While a large majority of Member States have expressed their support for this roadmap, citing the necessary correlation between competitiveness, the circular economy and decarbonisation, the objective of reducing greenhouse gas emissions by 90% by 2040 (see EUROPE 13344/1), has emerged as a sine qua non for the pursuit of objectives in all these areas: the legislation to achieve this has not yet been clarified.
Numerous Member States, including Luxembourg and Spain, have urged the Commission to present the amendment to the ‘climate law’ as quickly as possible, in order to provide guidance to investors and European industry alike, and to consolidate the European Union’s credibility on the international stage in the run-up to COP30.
France insisted that this objective should be based on “realistic” criteria, particularly for the industrial sectors that are the biggest emitters, and called for the necessary economic and budgetary resources to be specified. The Czech Republic spoke of the risks of losing competitiveness to less constrained partners, and reiterated the importance of guaranteeing stable and predictable energy prices.
Slovakia, which supported the climate ambition, called for industrial competitiveness to be preserved through dialogue with strategic sectors.
During the press conference held at the end of the discussions, the European Commissioner for the Environment, Jessika Roswall, maintained that “there was no elephant in the room” with regard to this amendment to the climate law, which was mentioned almost unanimously by the ministers and which, she asserted, remained within the “broad guidelines” of the Commission, which was determined to stay the course.
However, the Commissioner did not give a precise date for the publication of this amendment, mentioning only “the near future”.
European Decarbonisation Bank and Innovation Fund. With regard to the creation of the ‘European Decarbonisation Bank’, which would enhance the innovation fund to support the clean technologies required to transform European industry, the Member States have called for further details, and have also called for private funding to be sought.
“Public funding will not be enough”, said the Polish Minister for Climate and the Environment, Paulina Hennig-Kloska, who chaired the debate, at a press conference. Several countries, such as Romania, have stressed the need to discuss new mechanisms between the instruments and sources of funding. In particular, Croatia and Italy have questioned how this bank will be funded, fearing poor coordination with existing instruments. And with good reason: the Bank is to benefit from a financing capacity of €100 billion, via the funds available to the Innovation Fund, the revenues from the Emissions Trading System (‘ETS’) and the revision of the InvestEU regulation.
In addition, the smaller countries, including Malta, Estonia and Lithuania, have stressed the importance of a fair geographical distribution of funds and easier access for SMEs.
Emissions Trading System and Carbon Border Adjustment Mechanism. The Polish Environment Minister revealed that more and more voices were coming out in favour of revising the Emissions Trading System (‘ETS’), “but once again, it is the European Commission that has the ball in its court”.
This point was addressed more broadly during a non-public exchange on ‘other business’, presented by France and concerning the stabilisation of allowance prices.
The Minister explained that several Member States wanted to make the ‘ETS’ system “less burdensome” and “less invasive on wholesale market prices”. The discussions are said to have resulted in a proposal to slow down the gradual phasing out of free allowances from 2026 to 2034.
Finally, countries such as Sweden and Cyprus have reiterated the importance of the Carbon Border Adjustment Mechanism (CBAM) in preventing carbon leakage and ensuring fair competition (see other news).
Circular economy. A large part of the discussion was devoted to the circular economy, which the European Commission and the Member States have identified as an essential lever for reducing industrial emissions, and which will be the subject of legislation under the ‘Clean Industrial Deal’.
Through circularity, the EU will have to “make the most of the limited resources” at its disposal, warned the European Commissioner for a Clean, Just and Competitive Transition, Teresa Ribera.
The ‘Clean Industrial Deal’ should help to create a market for raw and secondary materials and waste. “It’s an environmental issue, but above all it’s an issue of sovereignty and independence” for the EU, insisted French Environment Minister Agnès Pannier-Runacher.
To achieve this, it will be necessary to limit waste exports from the EU in order to “allow local producers to obtain supplies from nearby, in the interests of sustainability”, explained Mircea Fechet, Secretary of State at the Romanian Ministry of the Environment, adding that this would also avoid “shortages on the market” in the EU.
According to Estonia, the new legislation should encourage demand for raw and secondary materials. France, Germany and Finland have defended the introduction of sustainability criteria in public procurement. Because “recycled materials are often more expensive”, explained the Finnish Minister for Science, Sari Multala.
Member States have argued that recycling will need to be encouraged to achieve circularity targets. France and Belgium also insisted on going further, with Agnès Pannier-Runacher pointing out that “before we can recycle better, we need to reuse better”.
All this will only be possible if the rules are harmonised, pointed out Malta and Italy, particularly as regards the criteria for end-of-life waste, according to Estonia and Lithuania.
Pollution. The Netherlands and Belgium pointed out that industrial transformation initiatives should be accompanied by a reduction in pollution. The management of chemicals throughout the life cycle of products will also have to be “closely monitored (...) to create non-toxic material cycles”, warned Luxembourg’s Minister for the Environment, Serge Wilmes.
This will involve “a revision of our legislation in the chemical field”, warned the Swedish Environment Minister, Romina Pourmokhtari, who insisted on the urgency of revising the REACH regulation at the December 2024 Environment Council (see EUROPE 13547/9). (Original version in French by Florent Servia, Pauline Denys and Nithya Paquiry)