EPP calls for simplification of EU climate policy

The European People’s Party (EPP), the EU’s largest political group, has proposed a change in the EU’s approach to climate and economic policy to support the bloc’s declining economy, Euractiv reports.

According to the party’s statement, the EU’s main challenge is lagging behind the US and China in productivity and economic growth. To overcome this problem, EPP representatives called for an “ambitious deregulation and simplification program” during the leaders’ summit in Berlin last week. Particular attention was paid to supporting small and medium-sized enterprises, which suffer the most from excessive administrative burdens.

Among the EPP’s key proposals is a two-year suspension of sustainable reporting rules, such as the Corporate Sustainability Reporting Directive (CSRD), and limiting their application to companies with more than 1,000 employees.

Another radical idea is to abolish the mandatory renewable energy targets that have been in place in the EU since 2001. According to the EPP, member states should decide on their own which technologies to use to achieve climate goals. This strengthens the position of nuclear power supporters, such as France, in the confrontation with countries that focus on renewable sources.

The EPP leaders emphasize that climate policy should not hinder the competitiveness of the European economy. In this context, they propose to revise the Carbon Border Adjustment Mechanism (CBAM), which is due to start operating in 2026, and to allocate more funds from the Emissions Trading System (ETS) to support green technologies.

GMK Center estimates that European countries will allocate €10.5 billion to decarbonize the steel industry in 2023-2024. The bloc’s governments are actively supporting local producers on their way to carbon neutrality.

The main recipient of state aid in the EU is ArcelorMittal, with up to 28% of the total amount, as the company is the largest producer in Europe, has a wide presence and is a pioneer of the green transition in the steel industry with well-developed roadmaps for its plants.

At the same time, other countries with the EU market as their main export destination do not have such capabilities. Therefore, the EU CBAM could further increase inequality between companies from different countries, and overall, the mechanism does not offer solutions to promote decarbonization in third countries.

The CBAM could be a disaster for Ukraine as well, as the EU is the largest trading partner of domestic producers who face shelling, logistical constraints, power outages, staff shortages, etc. The war puts producers in conditions that do not allow them to invest in a “green” transition.