EU to roll back environmental regulations in bid to compete with US and China

The EU is poised to roll back a series of environmental standards on Wednesday as part of its deregulation drive to stay up with the United States and China.

The European Union’s focus has shifted to competitivity amid fears about slowing economic development, a notable departure from EU leader Ursula von der Leyen’s first term, which concentrated on combating climate change.

The problem has taken on new significance as US President Donald Trump pursues an America First approach that risks a trade war with the EU.

Exasperated companies – as well as key powers France and Germany – are urging Brussels to make it easier to do business and bring down energy costs, which are higher than in the United States.

With these worries in mind, the European Commission will announce a package of ideas that leaked draft papers obtained by AFP suggest may include weakening green regulations as well as initiatives to reduce energy prices and enhance the clean tech industry.

They will need permission from EU member states and the European Parliament.

New environmental and human rights supply chain norms, which were enacted with fanfare only a few months ago, are already being criticised as being unduly costly on firms.

“The reality is there is an increasingly tense geopolitical context and we cannot ask our companies to invest massively in reporting resources when they should be in a war economy and are in the midst of decarbonising,” EU industry chief Stephane Sejourne said.

Clipping green rules

Two major texts are in the EU’s firing line: the Corporate Sustainability Reporting Directive (CSRD), which requires large firms to give investors and other “stakeholders” information on their climate impacts and emissions, and steps taken to limit them.

The other is the Corporate Sustainability Due Diligence Directive (CSDDD) – passed last year – which demands large companies fix the “adverse human rights and environmental impacts” of their supply chains worldwide.

In a draft document, the EU says companies must report on supply chains every five years rather than annually, which will “significantly reduce burdens”.

It added the commission would make larger companies – with more than 1,000 employees – comply.

Today, the rules apply to firms with over 250 employees and a 40-million-euro ($42-million) turnover.

Past ‘mistakes’

The changes will likely be hotly debated in the EU parliament, with centrists, left-wing and green lawmakers opposed to weakening environmental rules – although some liberals said they accepted changes.

French centrist Marie-Pierre Vedrenne now considers the rules to have been a “mistake”, despite previously voting for them.

“The world is completely changing,” she said. “I think we need to say at the European Parliament ‘OK, sometimes we make mistakes’”.

The parliament’s socialist grouping, however, urged Brussels to “revisit” its approach in a letter last week.

Climate groups oppose paring back the rules.

“Changing the course now would be very detrimental to leading companies who are committed to sustainability and started investing money and resources in complying with legislation,” Amandine Van Den Berghe of environmental law NGO ClientEarth said.

“If the race is a race to the bottom, we won’t win,” she said.

‘Step forward’ Europe

Brussels insists it remains committed to its environmental goals, and to become climate-neutral by 2050.

In sync with the move to cut red tape, the EU will Wednesday present its “Clean Industrial Deal” – a mix of measures for a stronger green tech sector – as well as steps to lower energy prices.

With Trump rejecting his predecessor’s push to bolster clean tech investment, Brussels believes there is an opportunity for Europe.

“The fact that the US is now moving away from the green agenda… does not mean that we would do the same. The opposite. It means that we need to step forward,” said EU energy commissioner Dan Jorgensen.

Representatives for the business sector in Brussels, however, privately expressed concern that concrete measures to reduce energy costs could come too late.

For example, they pointed to a leaked document which says Brussels will reform state aid rules by July and a legal proposal to cut waiting times for renewable energy projects’ permits that will be introduced by the end of 2025.