Critics of von der Leyen’s climate policy say it has exacerbated the energy crisis and Europe’s resulting deindustrialisation.

WHAT: The upcoming European parliamentary elections will have a significant bearing on future EU climate policy.

WHY:  There has been a backlash against climate policy in light of the energy crisis and resulting deindustrialisation.

WHAT NEXT:  There could be further backtracking on policy if predictions of a shift in Parliament to the far right materialise.

 

Results from the European Parliament elections next month could have major implications for the EU Green Deal and other climate policy, with far-right politicians expected to win more seats.

The elections, due to take place on June 6-9, will be followed by negotiations by lawmakers over who should take the top positions in Brussels, including the presidency of the European Commission. Current President Ursula von der Leyen has presided over a very ambitious climate agenda, enshrined in the European Green Deal, introduced within two months of the start of her presidency in December 2019. At its core, the deal set the goal of reducing greenhouse gas (GHG) emissions by 55% by 2030, versus 1990 levels, and bringing them to net zero by 2050.

However, the 2022 energy crisis and soaring high gas and power prices has led to a reassessment of green goals. Those against von der Leyen’s agenda argue that not enough attention has been paid to energy security and affordability, exacerbating the crisis triggered by Russia’s drastic cuts to European gas supply. Cuts in investment in natural gas supply also led to a resurgence in coal use, causing some reversal of progress.

The EU is also struggling to keep on track with its lofty targets. As of 2022, its GHG emissions were down only 32.5% versus 1990 levels, meaning there is also a significant way to go.

At the same time, the European economy is stagnating, primarily because of high energy prices, leading to calls for more focus on economic growth rather than sustainability. European industry has become less competitive versus industry in places with cheaper energy such as the US and China. 

The vice president of the current Commission, Maros Sefcovic, lamented at the poor state of affairs at an informal meeting of EU energy ministers in April, noting that the bloc was paying three to four times more for its natural gas than China and the US, putting huge pressure on its energy-intensive industry. High energy prices were also driving high inflation in Europe, he said, adding that the energy crisis had cost the European economy some €1 trillion ($1.06 trillion).

One of the countries hardest hit by the energy crisis has been Germany, whose industry used to rely on ample supply of Russian gas. That supply ended in autumn 2022 following the rupturing of the Nord Stream pipelines, and Germany has been scrambling to build up its LNG import capacity to replace it. Germany’s chemicals sector in particular has been badly affected, given its high gas use, and is now mired in a deep recession.

German chemical production dropped by 10.6% in 2023, to its lowest level since 1995, according to data released by the country’s federal statistics agency, while total production from industry, energy and construction dropped by 1.5%. Industrial production was down 0.7% year on year, led by a 10.2% fall in production from energy-intensive sectors.

Highlighting the extent of deindustrialisation, German power consumption last year slumped to its lowest level since 1990 last year.

The International Monetary Fund (IMF) last week slashed its growth forecast for Germany’s economy in 2024 to only 0.2%, having previously predicted 0.5% growth in January. It expects growth to pick up in 2025, at 1.3%. The EU economy will meanwhile grow by 1.4% this year.

Notably despite being heavily sanctioned, the Russian economy in contrast is expected to grow 3.2% this year – a faster rate than any other advanced economy in the world.

 

Growing backlash

Current polls predict that der Leyen’s conservative European People’s Party will likely win the parliamentary elections, but she may have to make concessions to far-right politicians, who are set to increase their number of seats. These concessions could mean watering down some climate plans.

More and more environmental rules and policies are already being challenging and made less strict, whether it be the Nature Restoration Law – a cornerstone of the European Green Deal that has already been weakened by EU lawmakers and governments and now looks set to collapse – or the environmental rules connected with EU farming subsidies, the Net Zero Industry Act or the Stability and Growth Pact.

The European Green Deal faces criticism already from farmers, industrialists, public opinion and even national governments. While some of its laws have been adopted, such as an end to sales of internal combustion engine cars by 2035, a border carbon tax and rules against goods from deforested zones, progress slowed significantly last year on legislation to reduce the use of chemical pesticides and restore wilderness ecosystems, in light of opposition from farmers.

While the European manufacturing association AEGIS Europe said last September that it supported the Green Deal, it also said it was “extremely concerned about the noticeable deindustrialisation on the continent. And in March, business association BusinessEurope stressed that the next commission should “concentrate on essentials” by tying the deal with a solid policy plan to revive industry.

French President Emmanual Macron is among several leaders who have called for a pause on the introduction of more environmental regulation, and even von der Leyen – who is seeking another term as commission president – has said the Green Deal should enter a new phase, better factoring in the need to ensure the competitiveness of European agriculture and industry.

The election of a new parliament could hasten the backtracking on climate policy, causing progress on emissions to slow or even reverse. Some politicians will see this as necessary, though, for the sake of protecting economic prosperity.