European Union (EU) member states are at a crossroads over the long-standing dilemma of "environment or growth." As they weigh setting an ambitious climate target to cut greenhouse gas emissions 90% by 2040 from 1990 levels, backlash is intensifying from member states citing a potential hit to industrial competitiveness. Europe, which had led the world on climate issues, appears to be running into economic logic and political fatigue.
According to AP and others, on the 23rd local time the European Commission failed, after heated debate at an EU summit in Brussels, Belgium, to agree on the "2040 climate target" proposal put forward in July. The matter now moves to the environment ministers' meeting on Nov. 4. Two days later, from Nov. 6, the 30th U.N. Climate Change Conference of the Parties (COP30) opens in Belém, Brazil. COP30 is a venue where 190 countries gather to review greenhouse gas reduction policies. In the past, the EU would have led such a gathering, but this time it has not even set an internal target two days before the summit. The EU has also missed the deadline for submitting its 2035 national greenhouse gas reduction target (NDC) to the United Nations, which it should have filed in September.
At this meeting, the European Commission sought to discuss cutting net greenhouse gas emissions by 55% by 2030 compared with 1990, and by 90% by 2040. The ultimate goal is to achieve net zero by 2050. Net zero refers to a state in which greenhouse gas emissions (+) and absorption (−) are equal, bringing net emissions to "0."
European Commission Chairperson Ursula von der Leyen argued that setting this target would allow European corporations to secure competitiveness in clean technology markets such as batteries and solar panels, which China dominates. The logic is to build factories to produce European-made panels and batteries instead of relying on the massive Chinese-made batteries and panels consumed by each European country, thereby strengthening energy security. In a letter sent just before the summit, Chairperson von der Leyen emphasized, "We need unwavering momentum to win in the competition with China."
Member states, however, were cool to the idea. The energy transition requires massive upfront investment expense. Building factories to produce batteries and panels, installing power plant infrastructure, and overhauling power grids would mean additional expense at a time when defense expenditure has risen after the war in Ukraine and energy prices have surged.
By the European Commission's estimate, meeting the 90% reduction target will require average annual investment of 660 billion euros (about 960 trillion won) from 2031 to 2050. The think tank Strategic Perspectives projected annual investment of 1.5 trillion euros (about 2,180 trillion won).
If a higher carbon tax is levied on motor fuel or heating bills to meet the new climate target, discontent among corporations and citizens is likely to erupt. For example, "ETS2," which the EU plans to introduce in 2027, is a system that imposes carbon emission expense on the building heating and road transport (motor fuel) sectors. For the vast majority of ordinary citizens with homes and cars, it leads directly to higher fuel and heating costs. The European Central Bank (ECB) estimated that the ETS2 measure alone could push up the eurozone inflation rate by up to 0.4 percentage points in 2027. Experts therefore worry that large-scale backlash like the "yellow vests" protests that swept France in 2018 could be triggered as greenhouse gas cuts are pursued.
Weakening global climate cooperation is another burden. U.S. President Donald Trump withdrew from the Paris Agreement again upon taking office for a second term. The United States and China, while Europe hesitates, are growing related industries with cheap energy and massive government support.
According to BusinessEurope, an EU lobbying group, industrial electricity prices in the EU last year were already more than twice those in the United States and China. With the United States and China looking the other way on climate issues, Europe lacks grounds to present to its own public if it is to lead alone. Jos Delbeke, a professor at the European University Institute (EUI), said in an interview with Bloomberg, "As President Trump slows down, the global environment is not friendly to climate issues."
Some countries have made special requests to reflect the positions of their own corporations as much as possible in setting climate targets. Germany called for easing the burden on energy-intensive industries such as chemicals and steel, which are its mainstays. Companies like Germany's BASF, the world's largest chemical corporation, wanted free allocation of carbon allowances to be maintained longer. Chancellor Friedrich Merz of Germany attached the precondition of "enabling conditions," saying, "We must combine climate protection with the competitiveness of European industry."
Poland demanded a delay in introducing ETS2. Italy sought revisions to the provision banning sales of internal combustion engine cars in 2035, and France called for strengthening the carbon border adjustment mechanism (CBAM) to protect its industries. Latvian Prime Minister Evika Siliņa told Reuters, "The goal of climate protection is good, but Europe is not in a situation where it can afford to lose competitiveness."
Simone Tagliapietra, a senior fellow at the European think tank Bruegel, said, "Clean industrialization is the most advantageous path for Europe, which has high dependence on fossil fuels," adding, "To provide predictable demand for industry, each country should swiftly adopt climate targets."