Dispatch from the European Union | December '25
*** Our weekly Dispatches provide an overview of the most relevant recent and upcoming developments for the shift to climate neutrality in selected European countries, from policy and diplomacy to society and industry. For a bird's-eye view of the country's climate-friendly transition, read the respective 'Guide to'. ***
Stories to watch in the weeks ahead
Supporting industrial decarbonisation. On 10 December, the European Commission is due to unveil its follow-up to the Clean Industrial Deal to bolster EU competitiveness and cut emissions. Central to this is the Industrial Accelerator Act, aimed at increasing demand for clean products made in the EU by introducing sustainability, resilience, and 'Made in Europe' criteria for public and private procurements. The proposal will also help speed up permitting for the modernisation and decarbonisation of sectors like steel and create a label to show the carbon intensity of products. It comes as part of a push to bolster the competitiveness of European industry in the face of global competition.
Grids Package. On the same day, the Commission will present its Grids Package to upgrade and expand Europe’s electricity networks, support rapid electrification and accelerate permitting. Europe’s grids require a major modernisation and digitalisation effort to integrate more renewables and meet expected increases in electricity demand, as households and companies move away from fossil fuels. According to the Commission, Europe’s distribution grids need 730 billion euros of investment by 2040, while transmission grids need a further 477 billion euros.
Changes to transport laws. The Commission also plans to table laws and initiatives to support the transport sector on 10 December. That includes a revision of CO2 emission rules for cars and vans. The law has faced pushback from companies and EU countries, with German Chancellor Friedrich Merz calling for hybrid cars to be exempt from the 2035 ban on new internal combustion engine car sales. The package will also contain measures to support electric vehicles, including a Battery Booster Strategy and a law to help green corporate car fleets. However, there are reports that this could be delayed.
The latest in EU policymaking – last month in recap
2040 climate target. EU countries and the European Parliament have both agreed their respective positions on the union’s 2040 emissions reduction target, paving the way for negotiations on the final deal, with negotiations expected to start on 9 December. Both maintain the Commission’s proposed cut of 90 percent of emissions by 2040, in line with recommendations from the EU’s scientific advisory board. However, both want to increase the amount of international carbon credits that can contribute to the target to 5 percentage points and to delay the launch of a new carbon price for road transport and buildings, both of which have drawn criticism from NGOs and green business groups.
2035 target agreed. EU countries also signed off on the union’s 2035 emissions reduction target, which was required under the Paris Agreement ahead of COP30. After missing two United Nations deadlines, the EU submitted a target range of 66.25 percent to 72.5 percent just days before COP30. Lawmaker and climate policy spokesperson for the largest group in the European Parliament, the European People’s Party (EPP), Peter Liese, criticised the Danish presidency of EU countries and the European Commission for focusing too much on the 90-percent target for 2040 and not compromising to get a deal on the 2035 target. He also blamed countries like France and Poland for delaying decisions. As a result, the EU fell short on diplomatic outreach ahead of COP30, he argued in a press conference at the end of the climate conference.
Delay of ETS2. The new carbon price for road transport and buildings (ETS2) is likely to be delayed as a result of political wrangling over the EU’s climate targets. Both EU governments and the European Parliament voted in favour of delaying the scheme, designed to encourage emissions reductions in two sectors critical to meeting the EU’s climate goals. The transport sector is the EU’s biggest emitter, of which road transport is a significant part. The buildings sector is its biggest energy consumer. Clean tech industries and environmental groups have warned that this delay reduces the incentive to switch to clean mobility and heating, and risks reducing the amount of money available under the Social Climate Fund, a money pot designed to shield the most vulnerable households and small businesses from the carbon price effects.
Taking scissors to corporate sustainability rules. On 13 November, the European Parliament adopted its position on scaling back EU corporate sustainability laws. They agreed to reduce the scope of both the Corporate Sustainable Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) to only include large companies. Lawmakers also agreed to scrap mandatory transition plans companies would need to make to align their work with the Paris Agreement. Negotiations are underway with EU countries on the final law, with the last meeting expected on 8 December. Meanwhile, the EU’s Ombudswoman has criticised the European Commission for not sticking to its rules for evidence-based, transparent, and inclusive lawmaking.
COP30 staggers on fossil fuels. Efforts to secure a roadmap to phase out fossil fuels collapsed at the COP30 climate summit. The EU backed the idea, following a brief delay due to hesitation from countries like Italy and Poland. In total, the Brazilian COP30 presidency and more than 80 countries supported the measure, but a bloc led by Russia and Saudi Arabia ultimately succeeded in blocking it and any direct mention of fossil fuels from the final text. Talks will now continue outside of COP, including at a conference in Colombia in April 2026. Meanwhile, COP30 saw some agreements, including a deal on tripling adaptation finance by 2035, the creation of a new fund for rainforests, and initiatives to help countries implement and deliver on their nationally determined contributions.
Ban on Russian gas. EU negotiators agreed on 3 December to halt all imports of Russian gas into the union by 1 November 2027 at the latest. Short-term contracts and long-term contracts for liquified natural gas supplies will be banned earlier. However, Hungary is planning to challenge the plan at the EU’s Court of Justice. Both Hungary and Slovakia are reliant on supplies of pipeline gas from Russia and opposed the deal. It comes as part of a broader move to cut dependence on Russian energy imports following the invasion of Ukraine.
Kira’s picks: highlights from upcoming events and top reads
- Pressure on the EU’s methane regulation. The Financial Times reports that an EU law to monitor and reduce emissions of methane, a potent greenhouse gas, is under pressure, with the gas industry warning that it could impact the EU’s security of supply.
- Who supported the fossil fuel roadmap. Carbon Brief’s analysis of the informal list of countries opposed to a fossil fuel roadmap drawn up by the Brazilian presidency of COP30 points at inconsistencies and errors. The list also includes three EU countries – Bulgaria, the Czech Republic and Hungary – despite the EU backing the initiative.
- Electrification summit. The Electrification Alliance, an initiative representing stakeholders in the electricity supply chain, will host an all-day conference on 9 December, exploring the pathway to a competitive, secure European industry. This is particularly relevant ahead of the EU Grids Package and the Electrification Action Plan, expected next year.
