Europe’s chemical industry has reached a breaking point. The warning lights are no longer blinking — they are blazing. Unless Europe changes course immediately, we risk watching an entire industrial backbone, with the countless jobs it supports, slowly hollow out before our eyes. Consider the energy situation: this year European gas prices have stood at 2.9 times higher than in the United States. What began as a temporary shock is now a structural disadvantage. High energy costs are becoming Europe’s new normal, with no sign of relief. This is not sustainable for an energy-intensive sector that competes globally every day. Without effective infrastructure and targeted energy-cost relief — including direct support, tax credits and compensation for indirect costs from the EU Emissions Trading System (ETS) — we are effectively asking European companies and their workers to compete with their hands tied behind their backs. > Unless Europe changes course immediately, we risk watching an entire > industrial backbone, with the countless jobs it supports, slowly hollow out > before our eyes. The impact is already visible. This year, EU27 chemical production fell by a further 2.5 percent, and the sector is now operating 9.5 percent below pre-crisis capacity. These are not just numbers, they are factories scaling down, investments postponed and skilled workers leaving sites. This is what industrial decline looks like in real time. We are losing track of the number of closures and job losses across Europe, and this is accelerating at an alarming pace. And the world is not standing still. In the first eight months of 2025, EU27 chemicals exports dropped by €3.5 billion, while imports rose by €3.2 billion. The volume trends mirror this: exports are down, imports are up. Our trade surplus shrank to €25 billion, losing €6.6 billion in just one year. Meanwhile, global distortions are intensifying. Imports, especially from China, continue to increase, and new tariff policies from the United States are likely to divert even more products toward Europe, while making EU exports less competitive. Yet again, in 2025, most EU trade defense cases involved chemical products. In this challenging environment, EU trade policy needs to step up: we need fast, decisive action against unfair practices to protect European production against international trade distortions. And we need more free trade agreements to access growth market and secure input materials. “Open but not naïve” must become more than a slogan. It must shape policy. > Our producers comply with the strictest safety and environmental standards in > the world. Yet resource-constrained authorities cannot ensure that imported > products meet those same standards. Europe is also struggling to enforce its own rules at the borders and online. Our producers comply with the strictest safety and environmental standards in the world. Yet resource-constrained authorities cannot ensure that imported products meet those same standards. This weak enforcement undermines competitiveness and safety, while allowing products that would fail EU scrutiny to enter the single market unchecked. If Europe wants global leadership on climate, biodiversity and international chemicals management, credibility starts at home. Regulatory uncertainty adds to the pressure. The Chemical Industry Action Plan recognizes what industry has long stressed: clarity, coherence and predictability are essential for investment. Clear, harmonized rules are not a luxury — they are prerequisites for maintaining any industrial presence in Europe. This is where REACH must be seen for what it is: the world’s most comprehensive piece of legislation governing chemicals. Yet the real issues lie in implementation. We therefore call on policymakers to focus on smarter, more efficient implementation without reopening the legal text. Industry is facing too many headwinds already. Simplification can be achieved without weakening standards, but this requires a clear political choice. We call on European policymakers to restore the investment and profitability of our industry for Europe. Only then will the transition to climate neutrality, circularity, and safe and sustainable chemicals be possible, while keeping our industrial base in Europe. > Our industry is an enabler of the transition to a climate-neutral and circular > future, but we need support for technologies that will define that future. In this context, the ETS must urgently evolve. With enabling conditions still missing, like a market for low-carbon products, energy and carbon infrastructures, access to cost-competitive low-carbon energy sources, ETS costs risk incentivizing closures rather than investment in decarbonization. This may reduce emissions inside the EU, but it does not decarbonize European consumption because production shifts abroad. This is what is known as carbon leakage, and this is not how EU climate policy intends to reach climate neutrality. The system needs urgent repair to avoid serious consequences for Europe’s industrial fabric and strategic autonomy, with no climate benefit. These shortcomings must be addressed well before 2030, including a way to neutralize ETS costs while industry works toward decarbonization. Our industry is an enabler of the transition to a climate-neutral and circular future, but we need support for technologies that will define that future. Europe must ensure that chemical recycling, carbon capture and utilization, and bio-based feedstocks are not only invented here, but also fully scaled here. Complex permitting, fragmented rules and insufficient funding are slowing us down while other regions race ahead. Decarbonization cannot be built on imported technology — it must be built on a strong EU industrial presence. Critically, we must stimulate markets for sustainable products that come with an unavoidable ‘green premium’. If Europe wants low-carbon and circular materials, then fiscal, financial and regulatory policy recipes must support their uptake — with minimum recycled or bio-based content, new value chain mobilizing schemes and the right dose of ‘European preference’. If we create these markets but fail to ensure that European producers capture a fair share, we will simply create new opportunities for imports rather than European jobs. > If Europe wants a strong, innovative resilient chemical industry in 2030 and > beyond, the decisions must be made today. The window is closing fast. The Critical Chemicals Alliance offers a path forward. Its primary goal will be to tackle key issues facing the chemical sector, such as risks of closures and trade challenges, and to support modernization and investments in critical productions. It will ultimately enable the chemical industry to remain resilient in the face of geopolitical threats, reinforcing Europe’s strategic autonomy. But let us be honest: time is no longer on our side. Europe’s chemical industry is the foundation of countless supply chains — from clean energy to semiconductors, from health to mobility. If we allow this foundation to erode, every other strategic ambition becomes more fragile. If you weren’t already alarmed — you should be. This is a wake-up call. Not for tomorrow, for now. Energy support, enforceable rules, smart regulation, strategic trade policies and demand-driven sustainability are not optional. They are the conditions for survival. If Europe wants a strong, innovative resilient chemical industry in 2030 and beyond, the decisions must be made today. The window is closing fast. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is CEFIC- The European Chemical Industry Council  * The ultimate controlling entity is CEFIC- The European Chemical Industry Council  More information here.

High energy prices, risks on CBAM enforcement and promotion of lead markets, as well as increasing carbon costs are hampering domestic and export competitiveness with non-EU producers. The cement industry is fundamental to Europe’s construction value chain, which represents about 9 percent of the EU’s GDP. Its hard-to-abate production processes are also currently responsible for 4 percent of EU emissions, and it is investing heavily in measures aimed at achieving full climate neutrality by 2050, in line with the European Green Deal. Marcel Cobuz, CEO, TITAN Group  “We should take a longer view and ensure that the cement industry in EU stays competitive domestically and its export market shares are maintained.” However, the industry’s efforts to comply with EU environmental regulations, along with other factors, make it less competitive than more carbon-intensive producers from outside Europe. Industry body Cement Europe recently stated that, “without a competitive business model, the very viability of the cement industry and its prospects for industrial decarbonization are at risk.” Marcel Cobuz, member of the Board of the Global Cement and Concrete Association and CEO of TITAN Group, one of Europe’s leading producers, spoke with POLITICO Studio about the vital need for a clear policy partnership with Brussels to establish a predictable regulatory and financing framework to match the industry’s decarbonization ambitions and investment efforts to stay competitive in the long-term. POLITICO Studio: Why is the cement industry important to the EU economy?  Marcel Cobuz: Just look around and you will see how important it is. Cement helped to build the homes that we live in and the hospitals that care for us. It’s critical for our transport and energy infrastructure, for defense and increasingly for the physical assets supporting the digital economy. There are more than 200 cement plants across Europe, supporting nearby communities with high-quality jobs. The cement industry is also key to the wider construction industry, which employs 14.5 million people across the EU. At the same time, cement manufacturers from nine countries compete in the international export markets. PS: What differentiates Titan within the industry?  MC: We have very strong European roots, with a presence in 10 European countries. Sustainability is very much part of our DNA, so decarbonizing profitably is a key objective for us. We’ve reduced our CO2 footprint by nearly 25 percent since 1990, and we recently announced that we are targeting a similar reduction by 2030 compared to 2020. We are picking up pace in reducing emissions both by using conventional methods, like the use of alternative sources of low-carbon energy and raw materials, and advanced technologies. TITAN/photo© Nikos Daniilidis We have a large plant in Europe where we are exploring building one of the largest carbon capture projects on the continent, with support from the Innovation Fund, capturing close to two million tons of CO2 and producing close to three million tons of zero-carbon cement for the benefit of all European markets. On top of that, we have a corporate venture capital fund, which partners with startups from Europe to produce the materials of tomorrow with  very low or zero carbon. That will help not only TITAN but the whole industry to accelerate its way towards the use of new high-performance materials with a smaller carbon footprint. PS: What are the main challenges for the EU cement industry today?  MC: Several factors are making us less competitive than companies from outside the EU. Firstly, Europe is an expensive place when it comes to energy prices. Since 2021, prices have risen by close to 65 percent, and this has a huge impact on cement producers, 60 percent of whose costs are energy-related. And this level of costs is two to three times higher than those of our neighbors. We also face regulatory complexity compared to our outside competitors, and the cost of compliance is high. The EU Emissions Trading System (ETS) cost for the cement sector is estimated at €97 billion to €162 billion between 2023 and 2034. Then there is the need for low-carbon products to be promoted ― uptake is still at a very low level, which leads to an investment risk around new decarbonization technologies. > We should take a longer view and ensure that the cement industry in the EU > stays competitive domestically and its export market shares are maintained.” All in all, the playing field is far from level. Imports of cement into the EU have increased by 500 percent since 2016. Exports have halved ― a loss of value of one billion euros. The industry is reducing its cost to manufacture and to replace fossil fuels, using the waste of other industries, digitalizing its operations, and premiumizing its offers. But this is not always enough. Friendly policies and the predictability of a regulatory framework should accompany the effort. PS: In January 2026, the Carbon Border Adjustment Mechanism will be fully implemented, aimed at ensuring that importers pay the same carbon price as domestic producers. Will this not help to level the playing field? MC: This move is crucial, and it can help in dealing with the increasing carbon cost. However, I believe we already see a couple of challenges regarding the CBAM. One is around self-declaration: importers declare the carbon footprint of their materials, so how do we avoid errors or misrepresentations? In time there should be audits of the importers’ industrial installations and co-operation with the authorities at source to ensure the data flow is accurate and constant. It really needs to be watertight, and the authorities need to be fully mobilized to make sure the real cost of carbon is charged to the importers. Also, and very importantly, we need to ensure that CBAM does not apply to exports from the EU to third countries, as carbon costs are increasingly a major factor making us uncompetitive outside the EU, in markets where we were present for more than 20 years. > CBAM really needs to be watertight, and the authorities need to be fully > mobilized to make sure the real cost of carbon is charged to the importers.” PS: In what ways can the EU support the European cement industry and help it to be more competitive? MC: By simplifying legislation and making it more predictable so we can plan our investments for the long term. More specifically, I’m talking about the revamping of the ETS, which in its current form implies a phase-down of CO2 rights over the next decade. First, we should take a longer view and ensure that the cement industry stays competitive and its export market shares are maintained, so a policy of more for longer should accompany the new ETS. > In export markets, the policy needs to ensure a level playing field for > European suppliers competing in international destination markets, through a > system of free allowances or CBAM certificates, which will enable exports to > continue.” We should look at it as a way of funding decarbonization. We could front-load part of ETS revenues in a fund that would support the development of technologies such as low-carbon materials development and CCS. The roll-out of Infrastructure for carbon capture projects such as transport or storage should also be accelerated, and the uptake of low-carbon products should be incentivized. More specifically on export markets, the policy needs to ensure a level playing field for European suppliers competing in international destination markets, through a system of free allowances or CBAM certificates, which will enable exports to continue. PS: Are you optimistic about the future of your industry in Europe?  MC: I think with the current system of phasing out CO2 rights, and if the CBAM is not watertight, and if energy prices remain several times higher than in neighboring countries, and if investment costs, particularly for innovating new technologies, are not going to be financed through ETS revenues, then there is an existential risk for at least part of the industry. Having said that, I’m optimistic that, working together with the European Commission we can identify the right policy making solutions to ensure our viability as a strategic industry for Europe. And if we are successful, it will benefit everyone in Europe, not least by guaranteeing more high-quality jobs and affordable and more energy-efficient materials for housing ― and a more sustainable and durable infrastructure in the decades ahead. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Titan Group * The advertisement is linked to policy advocacy around industrial competitiveness, carbon pricing, and decarbonization in the EU cement and construction sectors, including the EU’s CBAM legislation, the Green Deal, and the proposed revision of the ETS. More information here.

Disclaimer: POLITICAL ADVERTISEMENT * The sponsor is Polish Electricity Association (PKEE) * The advertisement is linked to policy advocacy on energy transition, electricity market design, and industrial competitiveness in the EU. More information here The European Union is entering a decisive decade for its energy transformation. With the international race for clean technologies accelerating, geopolitical tensions reshaping markets and competition from other major global economies intensifying, how the EU approaches the transition will determine its economic future. If managed strategically, the EU can drive competitiveness, growth and resilience. If mismanaged, Europe risks losing its industrial base, jobs and global influence.  > If managed strategically, the EU can drive competitiveness, growth and > resilience. If mismanaged, Europe risks losing its industrial base, jobs and > global influence. This message resonated strongly during PKEE Energy Day 2025, held in Brussels on October 14, which brought together more than 350 European policymakers, industry leaders and experts under the theme “Secure, competitive and clean: is Europe delivering on its energy promise?”. One conclusion was clear: the energy transition must serve the economy, not the other way around.  Laurent Louis Photography for PKEE The power sector: the backbone of Europe’s industrial future  The future of European competitiveness will be shaped by its power sector. Without a successful transformation of electricity generation and distribution, other sectors — from steel and chemicals to mobility and digital — will fail to decarbonize. This point was emphasized by Konrad Wojnarowski, Poland’s deputy minister of energy, who described electricity as “vital to development and competitiveness.”  “Transforming Poland’s energy sector is a major technological and financial challenge — but we are on the right track,” he said. “Success depends on maintaining the right pace of change and providing strong support for innovation.” Wojnarowski also underlined that only close cooperation between governments, industry and academia can create the conditions for a secure, competitive and sustainable energy future.  Flexibility: the strategic enabler  The shift to a renewables-based system requires more than capacity additions — it demands a fundamental redesign of how electricity is produced, managed and consumed. Dariusz Marzec, president of the Polish Electricity Association (PKEE) and CEO of PGE Polska Grupa Energetyczna, called flexibility “the Holy Grail of the power sector.”  Speaking at the event, Marzec also stated “It’s not about generating electricity continuously, regardless of demand. It’s about generating it when it’s needed and making the price attractive. Our mission, as part of the European economy, is to strengthen competitiveness and ensure energy security for all consumers – not just to pursue climate goals for their own sake. Without a responsible approach to the transition, many industries could relocate outside Europe.”  The message is clear: the clean energy shift must balance environmental ambition with economic reality. Europe cannot afford to treat decarbonization as an isolated goal — it must integrate it into a broader industrial strategy.  > The message is clear: the clean energy shift must balance environmental > ambition with economic reality. The next decade will define success  While Europe’s climate neutrality target for 2050 remains a cornerstone of EU policy, the next five to ten years will determine whether the continent remains globally competitive. Grzegorz Lot, CEO of TAURON Polska Energia and vice-president of PKEE, warned that technology is advancing too quickly for policymakers to rely solely on long-term milestones.  “Technology is evolving too fast to think of the transition only in terms of 2050. Our strategy is to act now — over the next year, five years, or decade,” Lot said. He pointed to the expected sharp decline in coal consumption over the next three years and called for immediate investment in proven technologies, particularly onshore wind.  Lot also raised concerns about structural barriers. “Today, around 30 percent of the price of electricity is made up of taxes. If we want affordable energy and a competitive economy, this must change,” he argued.  Consumers and regulation: the overlooked pillars  A successful energy transition cannot rely solely on investment and infrastructure. It also depends on regulatory stability and consumer participation. “Maintaining competitiveness requires not only investment in green technologies but also a stable regulatory environment and active consumer engagement,” Lot said.  He highlighted the potential of dynamic tariffs, which incentivize demand-side flexibility. “Customers who adjust their consumption to market conditions can pay below the regulated price level. If we want cheap energy, we must learn to follow nature — consuming and storing electricity when the sun shines or the wind blows.”  Strategic investments for resilience  The energy transition is more than a climate necessity. It is a strategic requirement for Europe’s security and economic autonomy. Marek Lelątko, vice-president of Enea, stressed that customer- and market-oriented investment is essential. “We are investing in renewables, modern gas-fired units and energy storage because they allow us to ensure supply stability, affordable prices and greater energy security,” he said.  Grzegorz Kinelski, CEO of Enea and vice-president of PKEE, added: “We must stay on the fast track we are already on. Investments in renewables, storage and CCGT [combined cycle gas turbine] units will not only enhance energy security but also support economic growth and help keep energy prices affordable for Polish consumers.”  The power sector must now be recognized as a strategic enabler of Europe’s industrial future — on par with semiconductors, critical raw materials and defense. As Dariusz Marzec puts it: “The energy transition is not a choice — it is a necessity. But its success will determine more than whether we meet climate targets. It will decide whether Europe remains competitive, prosperous and economically independent in a rapidly changing world.”  > The power sector must now be recognized as a strategic enabler of Europe’s > industrial future — on par with semiconductors, critical raw materials and > defense. Measurable progress, but more is needed  Progress is visible. The power sector accounts for around 30 percent of EU emissions but has already delivered 75 percent of all Emissions Trading System reductions. By 2025, 72 percent of Europe’s electricity will come from low-carbon sources, while fossil fuels will fall to a historic low of 28 percent. And in Poland, in June, renewable energy generation overtook coal for the first time in history.  Still, ambition alone is not enough. In his closing remarks, Marcin Laskowski, vice-president of PKEE and executive vice-president for regulatory affairs at PGE Polska Grupa Energetyczna, stressed the link between the power sector and Europe’s broader economic transformation. “The EU’s economic transformation will only succeed if the energy transition succeeds — safely, sustainably and with attractive investment conditions,” he said. “It is the power sector that must deliver solutions to decarbonize industries such as steel, chemicals and food production.”  A collective European project  The event in Brussels — with the participation of many high-level speakers, including Mechthild Wörsdörfer, deputy director general of DG ENER; Tsvetelina Penkova, member of the European Parliament and vice-chair of the Committee on Industry, Research and Energy; Thomas Pellerin-Carlin, member of the European Parliament; Catherine MacGregor; CEO of ENGIE and vice-president of Eurelectric; and Claude Turmes, former minister of energy of Luxembourg — highlighted a common understanding: the energy transition is not an isolated environmental policy, it is a strategic industrial project. Its success will depend on coordinated action across EU institutions, national governments and industry, as well as predictable regulation and financing.  Europe’s ability to remain competitive, resilient and prosperous will hinge on whether its power sector is treated not as a cost to be managed, but as a foundation to be strengthened. The next decade is a window of opportunity — and the choices made today will shape Europe’s economic landscape for decades to come. 

Andrej Babiš, the right-wing populist who on Monday formed Czechia’s next government, wants to derail EU plans on curbing emissions, according to the government’s coalition program, seen by POLITICO’s Brussels Playbook. Babiš and his ANO movement formed a coalition with the right-wing Motorists for Themselves party and the nationalist Freedom and Direct Democracy. Babiš is expected to make his return to the European Council table at the next gathering of EU leaders in Brussels on Dec. 18-19. Critics fear that Czechia could become a new bête noire for the EU alongside Viktor Orbán’s Hungary and Robert Fico’s Slovakia. “I believe that if we look at his statements and his allies in Europe — like Viktor Orbán and what he has done with Hungary — he [Babiš] will start pushing the Czech Republic toward the margins,” Czech Foreign Minister Jan Lipavský told POLITICO. While Babiš still needs to be formally nominated as prime minister by the Czech president, he already has grand plans for his EU comeback: unraveling the bloc’s green policies. “The Green Deal is unsustainable in its current form, which is why we will promote its fundamental revision,” the draft coalition program reads.   The new government plans to push back against the implementation of a new market that would put a price on heating and fuel emissions (dubbed ETS2). The new emissions trading system is a cornerstone of the EU’s efforts to slash planet-warming emissions from the building and transport sectors and achieve climate neutrality by 2050. The Czech plan also states the government “will initiate a European-level reassessment” of the original emissions trading scheme, ETS1, which covers pollution from heavy industries and the energy sector. EU governments have already voted in favor of ETS2 and it is due to come into effect in 2027. However, the draft Czech government program includes a threat not to enact the rules: “In the case of ETS2 emission allowances for households and transport, we are prepared not to implement this system into Czech legislation and to prevent highly negative social impacts on society.” The draft also reveals that a future Babiš government views an EU ban on the sale and production of cars with combustion engines from 2035 as “unacceptable.” “The European Union has its limits — it does not have the right to impose decisions on member states that interfere with their internal sovereignty,” the draft reads. The ban was approved in 2023 by all member countries (despite last-minute resistance from Germany) but has proven controversial. Babiš is not alone in wanting to challenge EU Green Deal rules. The previous Czech government also requested a delay in ETS2 implementation, and Estonia called for it to be scrapped. Babiš may find an ally in Polish Prime Minister Donald Tusk, who trumpeted his success in inserting a “revision clause” into the EU plans to extend a carbon-trading system at a leaders’ gathering last month.  While the revision clause demanded by EU leaders does not explicitly call for a weaker ETS2, Tusk believes it will open the door to a delay of the measure. Babiš intends to personally oversee EU policy — abolishing the role of minister for European affairs and placing responsibility for EU matters in a department “subordinate” to the prime minister. The parties in the coalition will be expected to sign off on the government program. Then comes a period of wrangling as Babiš is expected to try to install Filip Turek, the controversial honorary president of the Motorists’ party, as foreign minister — a move President Petr Pavel may oppose, according to an EU diplomat.  Czech news outlet Deník N reported last month that Turek — a former member of the European Parliament and racing driver — had made racist, sexist and homophobic comments on Facebook before entering politics. Turek denied being behind the posts in a video posted on Facebook.

BRUSSELS — The European Union’s national leaders spent a summit venting their frustration about the bloc’s green transition — and ultimately agreed on language that didn’t demand specific changes to climate legislation. Thursday’s debate centered on how to align the EU’s climate goals with economic priorities, and was meant to resolve a deadlock over the bloc’s new emissions-cutting target for 2040. Many leaders raised national pet issues during the discussion, seven diplomats briefed on the talks said. But they refrained from insisting their specific concerns be addressed in the final summit text — which would have made it impossible to reach a consensus agreement. The eventual conclusions were agreed unchanged from the draft text prepared by diplomats this week — though few countries were entirely satisfied with the outcome. “Classic balance, everyone equally unhappy,” one diplomat said. Members of several governments were left wondering what difference the agreement would make for the 2040 climate target. Ministers had postponed their vote on the new goal in September, after some of the EU’s largest countries refused to approve the law without their leaders having a say. But the text agreed Thursday is deliberately vague, and stops short of endorsing the 2040 goal. That target, as proposed by the European Commission, would reduce the EU’s planet-warming emissions by up to 90 percent below 1990 levels. Ministers are due to reconvene and cast a vote on Nov. 4 — “groundhog day,” a second diplomat said. A third EU diplomat said they did “not see how the cards are any different” than in September, when ministers first tried to vote on the target. Leaders may just have “delayed the crisis” to Nov. 4, the diplomat added. Yet a fourth and fifth diplomat said they felt the discussion had sufficiently reassured key countries, particularly France and Germany, to enable them to support the target in the upcoming vote. The leaders’ agreement sets out “the enabling conditions” to achieve the climate target, the fourth diplomat said, with details to be worked out ahead of the Nov. 4 meeting. But the devil may be in those very details. After leaders approved the text, some diplomats interpreted a passage on the bloc’s new carbon tax on transport and heating fuels as opening the door to delaying its implementation. Other diplomats said that was not how they read the text. Still, many diplomats expressed relief that the debate had gone smoothly amid concerns that some leaders wanted to use the discussion to demand the EU weaken certain climate laws. Earlier in the week, European Commission President Ursula von der Leyen had issued a letter offering concessions to leaders, including revisions of some green laws and measures to limit the new carbon price. This letter, a seventh diplomat said, “was a game changer” and a decisive factor allowing leaders to reach Thursday’s agreement. Clea Caulcutt contributed reporting.

BRUSSELS — European Commission President Ursula von der Leyen has pledged to adjust key green laws to secure support for a new climate target.  In a letter to national leaders circulated on Monday, von der Leyen outlined plans to change the EU’s carbon pricing and existing climate targets for forests, among others.  The Commission president’s unusual intervention comes days before leaders are set to debate the EU’s new overarching emissions-reduction target for 2040 at their European Council summit. Governments have been unable to agree on the new target, with several EU countries expressing concern about the economic impact of the bloc’s new and existing climate measures. Leaders will discuss the link between competitiveness and climate on Thursday in Brussels.  In her letter, von der Leyen defends the upcoming target, insists that Europe’s future competitiveness requires a decarbonized economy — and hints that this means leaving some sectors behind.  “If a robust, resilient, sustainable and innovative economy is our goal, then dogmatically clinging to our existing business models, whatever their past successes, is not the solution,” she writes. “For the EU’s economy to take its rightful place in the global economy, we must be among those who are driving the response to the challenges of our time.”  Those challenges include “the scientific reality that we are increasingly putting our prosperity and our social models at risk, while our communities risk becoming uninhabitable,” she adds, while warning that the EU cannot afford complacency given China’s accelerating dominance in clean technologies and raw materials.  Yet von der Leyen also offers several key concessions to leaders, acknowledging that “no one should be able to submit our economic and social fabric to so much tension that it breaks down.”  GREEN DEAL TWEAKS Her Commission has proposed slashing the bloc’s planet-warming emissions by up to 90 percent below 1990 levels by 2040, albeit allowing countries to outsource up to 3 percentage points of this goal by purchasing carbon credits from other nations rather than achieving these reductions with domestic measures.  In her letter, von der Leyen opens the door to an increase in credit use, writing: “Part of the target — 3% in the Commission’s proposal, which ministers will further discuss — can be reached with high-quality international credits. Our domestic target … can be lower than 90%, as long as this is compensated by similar … reductions outside of the EU.”  She also responded to a key demand from governments to adjust the bloc’s new carbon price on transport and heating, plans that were controversial from the beginning as they are expected to lead to higher fuel bills for most consumers.  On Tuesday, she writes, the EU’s climate chief Wopke Hoekstra will announce specific tweaks to the measure, addressing “concerns of too high or volatile prices.” The Commission is looking at a “more robust price stabilisation system” as well as options to provide additional support for households to cope with the increased bills.  On Tuesday, she writes, the EU’s climate chief Wopke Hoekstra will announce specific tweaks to the measure, addressing “concerns of too high or volatile prices.” | Christophe Petit-Tesson/EPA Von der Leyen also said she shared some governments’ concerns about the carbon price the EU currently imposes on heavy-polluting industries such as steel, and promised a “realistic and feasible” future trajectory, without providing details.  She then pointed to upcoming changes in the EU’s targets for how much carbon dioxide is absorbed by forests and soils, known as LULUCF. Several governments have described the current goals as unrealistic, with some pointing to increased wildfires and others to the needs of their forestry industry.  “Already we can see the challenges that several of you are facing …. We are working on pragmatic solutions to alleviate these challenges, within the existing LULUCF Regulation,” von der Leyen writes.  Carbon markets and the LULUCF rules, together with national emissions targets, are the core sub-targets of the bloc’s climate framework.  The letter also reiterates already announced tweaks and plans, such as an accelerated review of the bloc’s combustion engine phaseout, and contains a lengthy annex outlining all the upcoming announcements.

EU officials did not assess the economic or environmental impacts of a contentious plan to pay poorer countries to cut pollution on Europe’s behalf, the EU executive has admitted in response to a records request. The use of carbon credits, which can be purchased by funding carbon reductions outside the EU, would be allowed under a European Commission proposal to cut climate pollution by 2040. But the basis for this choice did not involve any formal advice from the experts in the European Union’s climate department, DG CLIMA. In response to a document request by POLITICO seeking the Commission’s analysis of the economic and emissions impact of the policy, the EU executive branch responded that although it had consulted the economic analysis and modeling unit, “We regret to inform you that DG CLIMA does not hold any documents.” Climate campaigners and the EU’s own scientific advisers have criticized the proposal for weakening the bloc’s domestic efforts to curb greenhouse gas emissions. They have also warned of risks that the credits could be fraudulent or undermine the EU’s carbon trading system. In the face of this, the Commission capped the use of the credits at 3 percentage points of the target to help reach an overall cut in emissions of 90 percent below 1990 levels by 2040.  An initial impact assessment for the 2040 target produced by the Commission last year did not make any analysis of carbon credits use — an option that only entered into discussions this past spring. Commission spokesperson Anna-Kaisa Itkonen said the EU executive had conducted “extensive engagement” with “stakeholders” and political groups before publishing the proposal, in order to “consider the possible inclusion of a limited amount of high-quality international credits in the design of the post-2030 policy framework.” Itkonen added that the Commission had committed to carrying out an impact assessment on the use of the international carbon credits. In June, the head of the climate department, Kurt Vandenberghe, said his team was “not entirely prepared” for the proposal, which was championed by Climate Commissioner Wopke Hoekstra. Advocates of the system — including Hoekstra and also notable carbon markets experts — point to improved international agreements designed to prevent dodgy credits.  The policy could have major implications for EU spending and the bloc’s efforts to curtail climate impacts. Advocates of the system — including Wopke Hoekstra — point to improved international agreements designed to prevent dodgy credits. | Olivier Hoslet/EPA Three points of the 90 percent target amount to roughly 144 million metric tons of greenhouse gases — equivalent to the current annual emissions of the Netherlands and 30 percent of total EU emissions in 2045, as calculated by the Carbon Market Watch NGO. A credit represents one metric ton.  But the nonprofit estimates that depending on how the bloc ends up defining the cap on credit use, it might end up purchasing as many as 700 million credits.  The price on pollution varies wildly across markets and countries, from a global average of less than $5 per metric ton of carbon offset last year to the EU’s current domestic price of roughly €70 ($82) per metric ton of carbon emitted. The cost of the credits the EU plans to purchase abroad, and whether companies or taxpayers would pay for them, is unclear for now — one of many unanswered questions an impact assessment would presumably help to address. Any cash spent on credits would then be unavailable to help the bloc’s own economy decarbonize, the EU’s scientific advisers warned. In a June note they said the cost of trustworthy credits that actually deliver pollution cuts was “very high … Purchasing such credits from abroad could therefore come at the expense of domestic investment opportunities.”  The Commission, in its announcement of the target, promised to deliver a “thorough impact assessment” when proposing the detailed legislation for carbon credit use. This proposal is expected next year. In June Vandenberghe echoed the concerns of campaigners, who have frequently pointed to a previous episode that saw dodgy credits flood the EU’s carbon market, tanking the price and hurting emissions-reduction efforts. “We would be well advised to do a very deep impact assessment to look [at] all the detailed questions,” he said.