The European Union can continue to count nuclear power, and in some cases fossil gas, as “environmentally sustainable,” after the EU’s top court ruled the European Commission was not breaching its obligations to tackle climate change. The General Court on Wednesday found against a complaint from Austria, which sought to overturn the decision to include the two energy sources in the EU’s taxonomy regulation, which determines which investments can be considered as green. The General Court, part of the Court of Justice of the European Union, said in its judgment the Commission “was entitled to take the view that nuclear energy generation has near to zero greenhouse gas emissions and that there are currently no technologically and economically feasible low-carbon alternatives at a sufficient scale.” The court added it “endorses the view that economic activities in the nuclear energy and fossil gas sectors can, under certain conditions, contribute substantially to climate change mitigation and climate change adaptation.” The case was brought by Vienna in 2022, arguing that the inclusion of nuclear power and fossil gas breached EU law and that the Commission had neglected to carry out an impact assessment or public consultation and bypassed normal legislative processes. Leonore Gewessler, who was then Austria’s climate and energy minister and now leads the opposition Green Party, launched the legal action after the list of green investments was published almost three years ago. “What I oppose with all my might is the attempt to greenwash nuclear power and gas via the backdoor of a supplementary delegated act,” Gewessler said at the time. “I think it is irresponsible and unreasonable. From our point of view, it is also not legal.” The government of Luxembourg also expressed support for the case. The ruling means that a deadlock over EU funding for conventional nuclear reactors could come to an end, and is a boon to French efforts to unlock such investments. It also comes just after Germany last week penned an agreement with France to develop a coherent policy accepting the inclusion of atomic power in a low-carbon energy mix. The move has created speculation that Berlin, which shuttered its own reactors in the wake of the 2011 Fukushima disaster, may stop blocking efforts to direct EU funds toward the technology.

The European Commission president’s big set-piece speech of the year is upon us. The State of the Union address is where Ursula von der Leyen sets out her vision for the year ahead, and it promises to be a very challenging 12 months, for her and for Europe. So we tapped into the POLITICO newsroom’s deep knowledge of the political and policy realms and have attempted to preempt her speech by writing our own version. This is what we think she’ll say. Remember, this is not the actual State of the Union but our version of it. As it says on all speeches sent to journalists ahead of time, “please check against delivery.” Madam President, Honorable members, My fellow Europeans, This comes at a pivotal moment for Europe. We live in a world that presents many challenges for our Union; challenges that we as Europeans will have to face together. It is also a time for Europeans to decide which kind of future they wish to embrace; one of unity, one of strength, one of making our continent a better, more secure place; or one of conflict and dissent, in which we let external forces dictate the direction of our lives. There are people out there who want to destroy Europe; who side not with those of us who want a peaceful, prosperous Europe, but with our enemies. I know which path I will choose. And I believe, as I am sure you do too, that the people of Europe will take the right road. That is why, as we reflect on the State of our Union, we must acknowledge the advances we have made but also build the foundations of a more stable Europe, one that is less reliant on others in critical areas. UKRAINE AND DEFENSE Mesdames et Messieurs, les députés, Russia’s brutal war against Ukraine has presented us with challenges not seen since World War Two. As a result, we must take greater responsibility for our own security. That means investing in robust defense, safeguarding our people, and ensuring we have the resources to act when needed.  The EU’s likely message to Ukraine? We are at your side. | Olivier Hoslet/EPA Investing in European defense means investing in peace and long-term stability for current and future generations. It also means boosting technological innovation, supporting European competitiveness, promoting regional development, and powering economic growth.   Our ReArm Europe plan gives member states greater flexibility to spend more on defense while ensuring that the European defense industry can produce at speed and volume. It will also allow the rapid deployment of troops and assets across the EU. Red tape needs to be slashed to reach these aims. In a first step to simplify regulations, the Commission has already proposed a Defence Readiness Omnibus that will help untangle investment rules. However, simply spending more is not enough. Member states need to spend better, work together, and prioritize European companies. The EU will support this by helping coordinate investments and making sure that defense equipment is ‘Made in Europe’.  Yet the challenges caused by Russia are great and varied, including the threats caused by hybrid warfare attacking European infrastructure, and the increasing spread of disinformation online. We already have plans for an early-warning system and rapid response teams to help hospitals fight off cyberattacks. We can only overcome these problems by working together and, rest assured, Europe will also maintain diplomatic and, in particular, economic pressure on Russia. This week we will publish the 19th package of sanctions, as we tighten the net on those who do business with Russia. Working with our partners in the U.S., we are continuing to limit Russia’s potential and showing Vladimir Putin that we are serious about bringing an end to this war. Because a predator such as Putin can only be kept in check through strong deterrence. Our boost to defense is not just for our own security but for that of our allies and neighbors, and those who share our European values and wish to join the bloc. That is why our message to Ukraine is clear: Your future is in the European Union and we have been, and will continue to be, at your side every step of the way. REVIVING THE EUROPEAN ECONOMY Meine Damen und Herren Abgeordnete, As we look to advance our goals to boost European competitiveness, we have strong foundations such as our potential to unleash vast resources and latent technological and industrial power. I asked Mario Draghi to deliver a report on how to revive the European economy. One year ago, he delivered that report and we have been delivering on his recommendations. The year since the publication of Mario Draghi’s report has been all about cutting red tape and … boosting European competitiveness. | Olivier Hoslet/EPA As part of the Commission’s plans for the next multiannual financial framework — an ambitious and dynamic budget that will help us meet the challenges of the future — we created a €409 billion cash pot to fund Europe’s industrial revival, allowing European firms to rapidly scale up and cut red tape when accessing EU funds. And after a very clear signal from the European business sector that there is too much complexity in EU regulation, we launched the Omnibus Package to simplify legislation for sustainable finance, due diligence and taxonomy rules, and save companies €37 billion a year by 2029.   Mr. Draghi also recommended a single market for investment in the EU, and we have pushed forward plans for a Savings and Investments Union that would integrate supervision of capital markets and break down national barriers for the likes of stock exchanges and clearinghouses. The other major challenge we face is trade. The Commission has taken steps to deepen partnerships with trusted allies, partners and friends, which is an essential step in today’s uncertain geopolitical climate. We have in recent weeks secured trade deals with the United States as well as with Mexico and the Mercosur bloc of Latin American countries. I urge everyone in this House who believes in making our Union stronger to support these trade deals as they, and others, will help businesses across the continent, opening up our markets and diversifying our exports. The Mercosur deal alone opens up a market of over 280 million people for European exports, while the U.S. trade deal saves trade flows, saves jobs in Europe and opens up a new chapter in EU-U.S. relations. MIGRATION Señoras y señores diputados, Europe remains a place of safe refuge for those fleeing conflict and climate change. But I am of the firm belief that migration needs to be managed. That is why, after the launch of the Migration and Asylum Pact, we created a plan to streamline deportations, toughen penalties for rejected migrants who do not leave the bloc, and create hubs in countries outside the EU to house people awaiting deportation. Migration is often exploited by populists for political gain. But we want to create a system that supports those with a genuine asylum claim while making clear the rules on forced returns, and incentivizing voluntary returns. We also want to continue attracting talent from across the globe in areas where Europe is a world leader, such as in the life sciences and biotech spheres. Migration is a key issue for European citizens, but there are others. The latest Eurobarometer survey shows that the No. 1 issue Europeans want the EU institutions to resolve is the cost of living crisis. Across the continent, families are struggling to pay for homes, and this Commission is determined to do everything in its power to ease the pressure they are facing.  Migration is a key issue for European citizens. | Gene Medi/NurPhoto via Getty Images Early next year, we will present Europe’s first-ever European Affordable Housing Plan, which will aim to accelerate the construction of new homes, the renovation of existing buildings, and ensure no one sleeps on the streets by 2030. To do so, we will move to put in new measures to limit speculation, introduce regulations for short-term rentals in stressed housing markets, and cut red tape to boost public and private investments in the construction of new homes. People are also concerned about their energy bills and, here, the Commission is taking action. We must never forget Putin’s deliberate use of gas as a weapon, and that is why the EU will phase out Russian gas by 2027 thanks to the REPowerEU roadmap. As part of our deal with Washington, we will increase our energy imports from the U.S. over the next three years, a plan that is fully compatible with our medium- and long-term policy to diversify our energy sources and part of our commitment to the green agenda that so many in this House, myself included, fully support. That is why we have drawn up the Grids Package, which will come out later this year and aims to turbocharge investment in power networks, which is the key bottleneck in the uptake of more renewables. ARTIFICIAL INTELLIGENCE Signore e signori, deputati, The time is coming when artificial intelligence will match human thinking. That is why this week we published a report looking at the challenges and opportunities of AI. In Europe, we must take a leading role in shaping high-impact technologies. We will make sure there is smart yet strategic regulation while creating the right incentives, including funding and investment, to prevent AI and other technologies from becoming destabilizing forces. But we must not forget our traditional industries. The automotive sector is a critical pillar of the European economy, supporting more than 13 million jobs. The industry is facing increased competition from those who have benefited from unfair subsidies, and we have taken big steps to ensure this critical sector remains competitive and made in Europe. With our Automotive Action Plan, we set a strong course for building European batteries and ensuring our companies are the technological leaders in autonomous driving. At the same time, we have made big strides in maintaining our climate goals while giving our companies the necessary flexibility to stay competitive. THE EU BUDGET Panie i panowie, posłowie, We want a stronger European Union, stronger member states, and stronger regional and city governments, and we will work with local leaders — those closest to Europe’s citizens — to ensure they get the funds they need.  Cohesion Funds have helped build our Union with bridges and railways, public sports halls and libraries. Our cohesion policy is a central pillar of the European Union, and we will ensure that it continues to bridge gaps between regions, while also earmarking funds for the cities in which nearly three-quarters of all Europeans live. But we also want to protect and promote one of the most important elements of Europe, its agriculture and farmers. With our budget proposal we are safeguarding direct payments to farmers, boosting the funding available to rural communities, and giving more money to national governments to spend on agriculture. Farmers are essential to Europe, and what matters to Europeans matters to Europe. We need a continent that is united, safe and prosperous. I believe we can rise to the challenge. Long live Europe. Thanks to Victor Jack, Sam Clark, Max Griera, Pieter Haeck, Jordyn Dahl, Aitor Hernández-Morales and Helen Collis.

The little Basque village of Zubieta has an unlikely talent for a place its size: This community of 300 souls can make the trash of half a million people vanish into thin air. Each year, as much as 200,000 metric tons of waste from across northwestern Spain is trucked to the Gipuzkoa treatment plant on the edge of the village. There it is sorted and fed into a giant incinerator, generating enough electricity to power 45,000 homes. The Gipuzkoa plant was meant to be an eco-friendly alternative to landfill, but it’s backfiring. Locals have accused the plant’s owners and the regional government of violating European Union environmental laws and releasing hazardous levels of pollution into the surrounding water, air and soil. It’s even spurred a criminal court case. “The court has to decide if the environmental permit [granted by the local government] is in accordance with [the] EU directive on pollution,” says Joseba Belaustegi Cuesta, a member of the grassroots GuraSOS movement that is campaigning against the incinerator. Gipuzkoa is not a one-off. Across Europe, hundreds of waste-to-energy facilities have mushroomed over the years, built on the promise that burning trash to generate electricity is better for the environment than burying it in a landfill. But studies increasingly find that the pollution generated by these facilities also harms the environment and people’s health. The EU, meanwhile, has massively reduced funding for such projects, while municipalities are still repaying the debt they accrued to fund them. At best, critics say, waste-to-energy plants risk becoming unpopular relics of a misguided waste policy. At worst the existing debt-funded plants could become “stranded assets” that struggle to find enough trash to burn to ensure they remain commercially viable. Gipuzkoa itself was financed with €80 million worth of bonds whose repayment date is 2047. The plant, in other words, needs to keep running for another two decades — regardless of the environmental cost. Belaustegi Cuesta complains that the incinerator now imports “residues that [are] not even household residues” to feed itself. French asset manager Meridiam, the biggest shareholder in the Gipuzkoa plant, did not respond to POLITICO’s request for comment. EUROPE’S WASTE PROBLEM Some 500 waste-to-energy plants operate on EU soil today and burn around a quarter of Europe’s everyday trash, according to waste-to-energy lobby CEWEP.   Plant operators and their investors say these furnaces are essential if Europe wants to meet its goal of sending less than 10 percent of household waste to landfills by 2035. In 2022 Europeans generated roughly 190 million metric tons of household waste, according to data from Brussels statistical office Eurostat. | Thomas Samson/AFP via Getty Images In 2022 Europeans generated roughly 190 million metric tons of household waste, according to data from Eurostat, Brussels’ statistical office. Despite recycling roughly 40 percent — more than any other region — the EU still buries a big chunk of its trash. More than 50 million metric tons of municipal waste were sent to landfills in the EU in 2023, enough to cover central Paris with a 20-meter pile of garbage.  Waste-to-energy is considered a slightly cleaner alternative: About 58 million metric tons were incinerated in 2023, nearly all of which was used to make energy, EU data shows. EU laws on waste require companies to prioritize reuse and recycling over waste incineration and landfilling. “The main objective of a waste-to-energy plant is not to produce energy; its primary purpose is to manage waste that cannot be recycled,” explained Patrick Dorvil, senior economist in the circular economy division of the European Investment Bank. The power generation benefits are often what the waste-to-energy lobby advertises when promoting the technology, however.  “With one week of your household’s residual waste, you have enough heat to warm your home for at least 8 hours,” CEWEP writes in its 2025 brochure. The lobby also claims that about 10 percent of district heating in Europe comes from energy made by burning waste, and that the technology contributes to renewable energy generation and landfill diversion.  POLLUTION CONCERNS But green groups say it’s a mistake to think waste-to-energy is a cleaner source of energy than fossil fuels. Poorly sorted municipal waste often means that a lot of fossil fuel-based plastic gets burnt, releasing planet-warming CO₂ in the process.  “The argument that burning waste is better than landfilling oversimplifies a complex issue. Both practices have serious environmental impacts and neither should be seen as a viable long-term solution,” said Janek Vahk, senior policy officer at Zero Waste Europe. The NGO estimates that each metric ton of municipal waste that is burned releases between 0.7 and 1.7 metric tons of CO₂. Scientists, meanwhile, warn that insufficient research has been conducted on the dangers faced by people living near incinerators. Plant operators insist that technological solutions and proper sorting can keep that pollution under control. But these concerns have not gone unnoticed, and popular backlash against waste incinerators is growing. In Rome, for example, tens of thousands of people signed a petition to stop the mayor from greenlighting a waste incineration project in Santa Palomba. And last March, French senators proposed to ban the construction of new waste incinerators in the country. The pollution concerns have led the EU to reduce its financial support for waste-to-energy plants and to introduce policy obligations meant to steer EU countries toward recycling.  Plant operators insist that technological solutions and proper sorting can keep pollution under control. | Christopher Neundorf/EPA Over the years, Brussels has introduced strict environmental conditions that projects must meet to receive EU funding. This has significantly reduced the amount of public funds allocated to waste incineration compared to larger sums earmarked for greener projects such as recycling plants.  Back in 2020, the technology’s carbon footprint was ultimately what prompted Brussels to exclude waste-to-energy plants from its list of eligible green projects. The list, called the EU taxonomy, tells investors what counts as a sustainable investment.  Meanwhile, local governments are stuck, environmental NGOs argue, with many still paying off the debt they accrued when agreeing to build the sites. “Many of these installation plans would turn out to be obsolete,” says Anelia Stefanova, energy transformation area leader for CEE Bankwatch, since EU countries are expected to meet waste reduction and recycling targets enforced by EU laws. STRANDED ASSETS As countries move toward greener waste management systems, the risk is that these large infrastructure projects could become useless. Many waste-to-energy plants already require more trash than tends to be available in the surrounding area. In Copenhagen, for example, the city’s infamous ski slope incinerator — itself financed through a 30-year loan —  imports tens of thousands of tons of waste from abroad annually to feed its furnaces.   Denmark has an “overcapacity in the incineration sector of up to 700,000” metric tons, according to its climate and energy ministry. The country is already budgeting to cover the costs of unnecessary waste incinerators. In 2020, Denmark introduced a plan to green the waste sector, which included allocating 200 million Danish kroner (€26 million) to municipalities to cover “stranded costs.” Lenders, including the EU’s official lending arm the European Investment Bank, are also acutely aware that the policy landscape has moved away from supporting the technology unconditionally. “Everything financed by the EIB must comply with EU directives. We are not policymakers; we are policy takers,” said the EIB’s Dorvil, adding that there have been plenty of cases where the bank has refused funding for financial or environmental reasons. Still, new waste-to-energy plants are in the works.  “When there are no incineration facilities then there [are] bigger landfills,” insists Hanna Zdanowska, mayor of the Polish city of Łódź. The city will soon have a new waste-to-energy plant planned by French energy company Veolia and paid for with a €97 million loan from the European Bank for Reconstruction and Development.  Zdanowska says the plant will increase the city’s “energy independence, which is also very important right now.” The EU’s Modernisation Fund is one of the last funding programs that still pays for waste-to-energy; it aims to help lower-income EU member countries transition their energy sectors away from fossil fuels. The €19 billion cash pot has poured just shy of €2 billion into waste-to-energy projects since its inception in 2021, all of them in Czechia and Poland. Asked if there’s a risk the new incinerator could become a stranded asset, Zdanowska said she “would love to have such a scenario that we really produce less waste in the future.”   “When the amount of waste goes down in the future and recycling goes up, then probably only a couple of plants will be left in the area and they will not limit themselves to collecting waste only from the city but they will expand their area for the whole region.”

With the European Green Deal and the Clean Industrial Deal, the EU set a clear course for the economic transition, serving Europe’s strategic interests of competitiveness and growth while also tackling climate change. For the EU to reach its industrial decarbonization and competitiveness objectives, the Draghi report identifies an annual investment gap of up to €800 billion. High-quality, reliable and comparable corporate disclosures, including on sustainability risks and impacts, are key to inform investment decisions and channel financing for the transition. EU rules on corporate sustainability reporting have been expected to fill the existing data gap. While simplification as such is a helpful aim, it looks like the Omnibus initiative is going too far. With the current direction of travel, confirmed by the Council in its agreement on 24 June, the Omnibus is likely to severely hinder the availability of comparable environmental, social and governance (ESG) data, which investors need to scale up investment for industrial decarbonization and sustainable growth, thus impairing their capacity to support the just transition. > The Omnibus is likely to severely hinder the availability of comparable > environmental, social and governance (ESG) data, which investors need to scale > up investment for industrial decarbonization and sustainable growth. The European Commission introduced the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy to respond to real needs, voiced over the years by investors and businesses alike. These rules were intended to close the ESG data gap, bring clarity and structure to the disclosures needed to allocate capital effectively for a just transition, and foster long-term value creation. These frameworks were not meant as ‘tick-box compliance exercises’, but as practical tools, designed to inform capital allocation, and better manage risks and opportunities. Now, the Omnibus proposal risks steering these rules of course. Although investors have repeatedly shown support for maintaining these rules and their fundamentals, we are now witnessing a broad-scale weakening of their core substance. Far from delivering clarity, the Omnibus initiative introduces uncertainty, penalizes first movers, who are likely to face higher costs due to adjusting the systems they put in place, and undermines the foundations of Europe’s sustainable finance architecture at a time when certainty is most needed to scale up investment for a just transition to a low-carbon economy. THE COST OF DOWNGRADING SUSTAINABILITY DATA The EU’s reporting framework is a critical enabler of investor confidence, for them to support the clean transition, and resilience building of our economy. It aims to replace a fragmented patchwork of voluntary disclosures with reliable, comparable data, giving both companies and investors the clarity they need to navigate the future. Let’s be clear: streamlining corporate reporting is a goal that is shared by investors and businesses alike. But simplification must be smart: by cutting duplications, not cutting corners. The Omnibus is likely to result in excluding up to 90 percent of companies from the scope of CSRD and EU Taxonomy reporting, if not more, should the council’s position, which includes a €450 million turnover threshold, be retained. This would significantly restrict the availability of reliable data that investors need to make investment decisions, manage risks, identify opportunities and comply with their own legal requirements. Voluntary reporting is unlikely to bridge this data gap, both in terms of the number of companies that will effectively report and regarding the quality of information reported. Using basic, voluntary questionnaires that were designed for very small entities would result in piecemeal disclosures, downgrading data quality, comparability and reliability. Market feedback has already demonstrated that it is necessary to go beyond voluntary reporting to avoid these shortcomings. This is precisely why EU regulators designed the CSRD in the first place. As a result of the Omnibus initiative, investors will likely focus on a limited number of investee companies that are in scope of CSRD and provide reliable information — limiting the financing opportunities for smaller, out-of-scope companies, including mid-caps. This will also restrict the offer and diversity of sustainable financial products — despite the clear appetite of end investors, including EU citizens, for these investments. This runs counter to the objectives of scaling-up sustainable growth laid down in the Clean Industrial Deal, and of mobilizing retail savings to help bridge the EU’s investment gap as proposed in the Savings and Investments Union. CUTTING DUE DILIGENCE BLINDS INVESTORS The CSDDD is also facing significant risks in the current institutional discussions. Originally, the introduction of a meaningful framework to help companies identify, prevent and address serious human rights and environmental risks across their value chains marked an important step to accelerate the just transition to industrial decarbonization and sustainable value creation. For investors, the CSDDD provides a structured approach that improves transparency and enables a more accurate assessment of material environmental and human rights risks across portfolios. This fills long     standing gaps in due diligence data and supports better-informed decisions. In addition, the CSDDD provisions to adopt and implement corporate transition plans including science-based climate targets, in line with CSRD disclosures, are providing an essential forward-looking tool for investors to support industrial decarbonization, consistent with the EU’s Clean Industrial Deal’s objectives. By limiting due diligence obligations to direct suppliers (so-called Tier 1), the Omnibus proposal risks turning the directive into a compliance formality, diminishing its value for businesses and investors alike. The original CSDDD got the fundamentals right: it allowed companies to focus on the most salient risks across their entire value chain where harm is most likely to occur. A supplier-based model would miss precisely the meaningful information and material risks that investors need visibility on. It would also diverge from widely adopted international standards such as the OECD guidelines for Multinational Companies and the UN Guiding Principles. The requirement for companies to adopt and implement their climate transition plans is also at risk, being seen as overly stringent. However, the obligation to adopt and act on transition plans was designed as an obligation of means, not results, giving businesses flexibility while providing investors with a clearer view of corporate alignment with climate targets. Watering down or downright removing these provisions could effectively turn transition plans into paperwork with no follow-through and negatively impact the trust that investors can put in corporate decarbonization pledges. Additionally, the council proposal to set the CSDDD threshold to companies above 5,000 employees, if adopted, will result in fewer than 1,000 companies from a few EU member states being covered. Weakening the CSDDD would add confusion and leave companies and investors navigating a patchwork of diverging legal interpretations across member states. A SMARTER PATH TO SIMPLIFICATION IS NEEDED How the EU handles this moment will speak volumes. Over the past decade, the EU has become a global reference point in sustainable finance, shaping policies and practices worldwide. This is proof that competitiveness and sustainability can reinforce, not contradict, one another. But that leadership is now at risk. > How the EU handles this moment will speak volumes. Over the past decade, the > EU has become a global reference point in sustainable finance, shaping > policies and practices worldwide. The position taken by the council last week does not address some of the major concerns from investors highlighted above and would lead to even more fragmentation in reporting and due diligence requirements across companies and member states. While the window for change is narrowing, the European Parliament retains the capacity to steer policy back on track. The recipe for success and striking the right balance between stakeholders’ concerns is to streamline rules while preserving what makes Europe’s sustainability framework effective, workable and credible, across both sustainability reporting and due diligence. Simplify where it adds value, but don’t dismantle the tools that investors rely on to assess risk, allocate capital and support the transition. What the market needs now is not another reset, but consistency, continuity and stable implementation: technical adjustments, clear guidance, proportionate regimes and legal stability. The EU must stand by the rules it has put in place, not pull the rug out from under those using them to finance Europe’s future. --------------------------------------------------------------------------------