John Whelan: New EU commission will face push back as new regulations kick in
Industry executives and politicians are pushing back on the slew of EU climate regulations coming from Brussels. Picture: Omar Havana/AP
The EU newly-elected commission has rolled up its sleeves and is set to begin ushering in plans and actions over its first 100 days.
Many industry executives, and increasingly politicians, are pushing back on the slew of EU climate sustainability regulations washing out from Brussels, with a fresh wave kicking in this month.
The issues have become particularly critical as most European economies continue to struggle with weak demand and rising costs.
European Green Party votes supported Ursula von der Leyen’s re-election, hoping to ensure the commission would make completing the Green Deal legislation as a priority of her new team.
However, many see this direction risks rendering European industries uncompetitive.
The first signs of policymakers adopting a less strident approach to regulatory roll out was observed last year, when Belgium held the EU presidency.
Its prime minister, Alexander de Croo, stated that “to compete with the rest of the world, we need an industrial policy”.
His contention was that with a more balanced approach to sustainability, a lot of pent-up demand and investment would be released.
In recent days, German chancellor Olaf Scholz stated that the EU should refrain from “punitive” fines on carmakers that fail to meet emissions standards, adding to the heated debate on the future of the key European industry.
The intervention comes days after stricter standards on cutting carbon emissions from new cars, to get the industry on track for the phase-out of petrol and diesel vehicles from 2035.
Carmakers that fail to meet these targets, face fines of €95 for every gram of CO2 above the target. And whereas these measures are aimed at carmakers, the regulation will impact car dealers and buyers in Ireland.
More critical to the wider Irish industry is the January implementation of the carbon tax on imports of cement, iron, steel, aluminium, fertilisers, and hydrogen.
Known as the “carbon border adjustment mechanism”, this tax has to be paid by importers of carbon intensive products into the EU.
A push back has been allowed on the EU Deforestation Regulation which aims to guarantee that the products EU citizens consume do not contribute to deforestation worldwide.
The regulation was originally due for implementation in December last year but has been delayed to December this year.
Again, the administrative burden will fall on businesses dealing with goods under the scope of this directive, to collect information and documents showing their products are deforestation free.
Among other new regulations for implementation in 2025, there is the Ecodesign for Sustainable Products Regulation, part of a package of measures to foster the transition to a circular and sustainable economy.
The regulation sets the so-called “eco-design requirements” for physical goods, as well as a number of other new measures — such as a Digital Product Passport and rules to address destruction of unsold consumer products.
US technology companies in Ireland offering products and services in the EU will need to prepare for significant changes to be brought in by the new Product Liability Directive, which has broadened the definition of a ‘product’ to include software, with AI systems being an example.
Former Central Bank president Mario Draghi’s report last year for the European Commission framed Europe as facing a choice between “exit, paralysis, or integration”.
The political conditions for further European integration are not ideal, as national elections in 2024 have seen the rise of Eurosceptic and nationalist groups in several key countries and has left the bloc more fragmented.
Undoubtedly the incoming Donald Trump administration will test EU unity, as well as its drive on climate change regulations.
Moving too far in the direction of protective trade measures, under the heading of EU sustainability, executives say is pushing costs too high and business profitability too low and, in the process, antagonising trade partners.
With increased competition from China and the US, the incoming European Commission must urgently address the weakness in its climate, trade, and policy mix.
