BRUSSELS — EU institutions can no longer continue tense talks on new rules to combat corporate greenwashing after Italy decided to withdraw its support for the bill. The decision means a landmark EU law clamping down on companies making misleading environmental claims is all but dead. “We have been instructed to communicate to you that Italy does not support the adoption of the proposal and supports a withdrawal of it by the Commission,” Italy told the Polish Presidency of the Council of the EU over the weekend, in a text seen by POLITICO. Tiemo Wölken, a German socialist MEP coordinating talks for the Parliament, said Italy had been “supportive of the file,” but withdrew support after a confusing series of announcements from the European Commission, which signaled it would withdraw its proposal on Friday. Italy’s move means that the Polish Presidency, which runs the negotiations on behalf of EU countries, no longer has enough support from EU governments to push ahead in the negotiations. On Sunday evening, POLITICO reported that the negotiations — which were due to continue on Monday — had been paused because of “too many doubts” and a lack of clarity on the European Commission’s intentions. The European Commission said it would scrap the proposed Green Claims Directive because it does not agree with a decision to include micro-enterprises in the scope of the rules. The law would require companies to provide evidence to back up any environmental claims they make. The news immediately sparked confusion among EU diplomats and lawmakers, who said it was unclear whether this meant that the Commission would continue negotiations or not. On Monday, the Commission denied that it planned on withdrawing the proposal before the final round of talks with MEPs and with EU countries. A spokesperson for the Italian government did not respond at time of publication.

Listen on * Spotify * Apple Music * Amazon Music Friedrich Merz bereitet seine erste Regierungserklärung vor – die Wirtschaftswende steht im Zentrum. Katherina Reiche will die Energiepolitik umbauen und Bürokratie abbauen. Was die ersten 100 Tage der CDU-Wirtschaftspolitik bringen werden, bespricht Gordon Repinski mit Romanus Otte.  Der exklusive Testzugang für unser Premium Briefing POLITICO Pro Industrie & Handel am Morgen ist hier zu finden. Im 200-Sekunden-Interview: Gitta Connemann. Mit ihr geht es um psychologisches Wachstum, Steuerpläne und Mindestlohn. Und: Die neue Entschiedenheit Deutschlands im Auftreten gegenüber Russlands. Hans von der Burchard mit der Analyse. Das Berlin Playbook als Podcast gibt es morgens um 5 Uhr. Gordon Repinski und das POLITICO-Team bringen euch jeden Morgen auf den neuesten Stand in Sachen Politik — kompakt, europäisch, hintergründig. Und für alle Hauptstadt-Profis: Unser Berlin Playbook-Newsletter liefert jeden Morgen die wichtigsten Themen und Einordnungen. Hier gibt es alle Informationen und das kostenlose Playbook-Abo. Mehr von Berlin Playbook-Host und Executive Editor von POLITICO in Deutschland, Gordon Repinski, gibt es auch hier:   Instagram: @gordon.repinski | X: @GordonRepinski.

Europe is at a pivotal crossroads. Geopolitical instability and economic anxiety dominate the headlines and risk leading politicians into neglecting, or worse, actively dismantling, the continent’s climate leadership. This must not happen. Rather than turning their backs in a time of crisis, EU leaders should seek to accelerate climate action as a path to both security and prosperity.   In the face of rampant disinformation and constant undermining by vested interests in the fossil fuel industry, some now talk of diluting Europe’s climate goals to appease lobby groups and climate-skeptic politicians. This would be a big mistake. Climate ambition cannot be diminished or dismissed for short-term political goals or vested interests. It must be long-sighted, future-proofed and transformational. Europe must now, more than ever, double down and show that climate action delivers for people, particularly those who have lost faith that climate action can benefit their everyday lives.  A commitment to reducing net emissions by at least 90 percent by 2040, phasing out fossil fuels and a strong Clean Industrial Deal that puts cities at the center of its delivery is as important to the health and well-being of Europeans as a strong defense policy, trade relationships or social safety net. If done well, with workers and families’ needs at the center, it will be essential to building a resilient, competitive and secure Europe.   If Europe wants to win hearts, minds and markets, it must prove how the climate transition delivers not just long-term targets, but also tangible benefits — and this all begins in cities with good green jobs, security, healthier places to live, work and play and lower bills.  Europe cannot achieve industrial competitiveness without decarbonization, and it cannot meet its climate commitments without transforming industry. Cities are hubs of economic activity, innovation and workforce development that will determine whether Europe succeeds in achieving both goals.   City leaders understand how EU policies land on the ground. Empowered cities can turn high-level climate ambition into real economic transformation.  Today, Europe’s 18 C40 cities, representing approximately 48 million residents and contributing €3.51 trillion to the global economy, already support 2.3 million green jobs — 8 percent of their total employment — including over 1.3 million in sectors like clean energy, waste and transport. That number will only grow as key sectors decarbonize. With the right support, cities can accelerate the creation of good, green jobs and better access to them: jobs that are safe, secure and future-proof.   > Europe’s 18 C40 cities, representing approximately 48 million residents and > contributing €3.51 trillion to the global economy, already support 2.3 million > good, green jobs   The examples are everywhere: London’s Green Skills Academy is reskilling thousands for low-carbon careers. Rotterdam, where construction materials and buildings account for 25 percent of the city’s €1.3 billion annual spend, is using procurement to scale the circular economy, and through the Circular Materials Purchasing Strategy, strives for a 50 percent reduction in primary resource consumption by 2030. Considering that C40’s European cities have reduced per-capita emissions by 23 percent between 2015 and 2024, these are not just local initiatives — they are scalable models of the industrial transformation Europe needs.   Cities also control powerful economic levers. Strategic procurement can shape markets, drive clean-tech adoption and support local small and medium-sized enterprises (SMEs). For example, Oslo mandates zero-emission construction in public projects, and five years on, 77 percent of municipal building sites are emission-free, a great example of procurement driving industry-wide changes. With direct access to funding and streamlined EU instruments, cities can go further and faster, creating demand for clean innovation and building thriving local economies from the ground up.  Yet today, only 13 percent of the global workforce is ready for these future careers, and Europe faces urgent skills shortages in high-emitting sectors. Cities are ideally placed to bridge that gap. Madrid and London, for instance, are already training workers in retrofitting, heat pumps and renewables. Paris streamlines business registration to support start-ups, while Lisbon provides free ESG training to SMEs, ensuring they meet evolving climate standards. But this needs serious investment at the EU level and real collaboration. Without structured EU-city collaboration, industrial policies risk being disconnected from economic realities and workforce needs.  A just transition also means ensuring that new green jobs are high-quality, inclusive and secure. The green economy has the potential to create 30 percent more jobs compared with a business-as-usual approach, but only if inclusion and fairness are built in from the start so these jobs will go to those who need them the most. Cities, in partnership with unions, businesses and workers, can ensure that industrial shifts translate into widespread job opportunities, particularly for marginalized communities. Projects such as ‘Boss Ladies’ in Copenhagen are championing the inclusion of women in the building sector.   A Clean Industrial Deal that excludes cities will fall short. One that recognizes them as co-creators — alongside businesses, unions and communities — can build the industrial, climate and social transition Europe urgently needs in a time of crisis. Cities must be full partners, with direct access to the tools, funding and policy frameworks needed to drive this transition.   To translate ambition into action, the Clean Industrial Deal must include clear national frameworks for sustainable investment, early business engagement and market-shaping tools like grants, innovation hubs and procurement. With strong public-private partnerships and targeted investments in cities, we can create the conditions for green jobs, resilient industries and lower energy bills.  This unpredictable decade has presented a once-in-a-generation opportunity for Europe to create a future that works for everyone. Europe’s clean industrial strategy must prioritize city-led innovation, invest in workforce transformation and deliver for those who feel most left behind. That is how Europe can regain global leadership — not by pulling back, but by proving how climate action can be the surest path to economic resilience, energy independence and shared prosperity.  > This unpredictable decade has presented a once-in-a-generation opportunity for > Europe to create a future that works for everyone.  

LONDON — Nigel Farage’s Reform UK is surging in the polls. Buoyed by a trip to Washington for Donald Trump’s inauguration, the populist leader boasts he will be the U.K.’s next prime minister. Now he and his insurgent party, best known for staking out populist positions on immigration and cultural issues, have found a new way to gun for the Labour government: net zero. The U.K. is embarking on a “clean energy sprint” to bring down its carbon emissions, Energy Secretary Ed Miliband has promised, which means investing billions in green tech as well as moving rapidly to approve vast solar and wind farms and ban new gas drilling licenses. Green advocates say this is much-needed global climate leadership. Miliband’s political opponents paint it as expensive and divisive at a time when hard-pressed voters want the government to back off from their lives. Farage spies a political opportunity. “I think net zero is going to be an absolute catastrophe, electorally, for Labour,” he told the BBC in December. The rush to go green is “going to be a defining feature of the debate, I think — the political debate, locally and nationally, from now until the next election,” Reform Deputy Leader Richard Tice told POLITICO in an interview. That will be, in part, because his party puts it there. Miliband’s policies make him “the most dangerous man in Britain,” Tice told the party faithful at a rally this month. Fellow Reform MP Lee Anderson, speaking at the same event, branded Miliband “a lunatic.” UP AND UP Reform — which delivered five MPs to parliament in last summer’s general election — has pledged to scrap the country’s legally binding target of net zero carbon emissions by 2050 and ditch subsidies for clean tech companies. It backs more drilling for planet-warming fossil fuels in the North Sea. Tice said recent flooding in the U.K. had “nothing to do” with climate change — a view sharply at odds with climate science. These positions are not shared by voters, the majority of whom believe climate change is one of the biggest issues the country faces. They broadly support ministers’ plans for big, climate-friendly investments, according to polling by YouGov. Parties like the Greens, which have even stronger climate goals than Labour, also made gains in July. “It is definitely true that Reform voters prioritize climate change less than other groups of voters, but they also don’t vote Reform for that reason,” argued Luke Tryl, director of the think tank More in Common.  The U.K. is embarking on a “clean energy sprint” to bring down its carbon emissions, Energy Secretary Ed Miliband has promised. | Sean Gallup/Getty Images Instead, the party has found a way to weaponize green policy by tying it to an issue on which the government is already vulnerable: Sky-high energy bills. Labour frontbenchers, including Miliband, pledged during the election campaign to cut bills by up to £300 a year. Instead, energy costs have increased steadily since they took office and are set to rise again this spring. (Labour is now reluctant to repeat the £300 commitment.) Tice, whose party finished second to Labour in 89 seats last summer, is alive to the political opening. “It [net zero] is driving up bills,” he said. “January’s bill’s gone up, April’s bill is going to go up.” If bills don’t fall like Labour promised, “people are going to be very angry,” he predicted at the end of last year. By contrast, Reform’s net zero policies would save “over £30 billion pounds a year of taxpayers’ cash,” Tice claimed. The party did not respond to repeated queries about how it arrived at the number. ‘DO PEOPLE FEEL IT IS AFFORDABLE?’ Experts agree that moving away from volatile fossil fuel markets is key to cutting energy costs in the long-term. U.K. bills, while they include green levies, have been driven up mainly by soaring global gas prices since 2022. The transition to net zero will create a “more affordable and fairer energy system for consumers,” the International Energy Agency said. But that involves complicated policy trade-offs around those levies — which push up electricity costs to pay for other climate-friendly schemes — and overhauling electricity market pricing. In the meantime, said Tryl, Labour could leave the door open to Reform if ministers do not find a way to get bills under control. “This is a question which is a lot less about Reform and much more about: ‘Does [the green] transition go well and do people feel it is affordable, that it is being fair, that it is giving us energy security?’” he said. “If Ed Miliband’s department manages to deliver that, there won’t be an ‘in’ for Reform,” Tryl added. But if Farage and co. can land their attacks, their approach follows a populist playbook in Europe and the U.S., where ambitious green policies have come under attack for their impact on voters’ lives. Former President Joe Biden poured billions of dollars of Investment into clean tech jobs — but it did not save his party from defeat at the hands of pro-fossil fuel Donald Trump. LABOUR NERVES Labour MPs understand the risk, said one person familiar with government thinking, granted anonymity to speak candidly. “I think it’s right to feel nervous if we don’t get bills down. But there’s every reason to believe that we will get bills down,” they said. Reform backs more drilling for planet-warming fossil fuels in the North Sea. | Ian Forsyth/Getty Images “No one’s under any illusion that we’ve got a fight on our hands with Reform on a range of issues … Absolutely, it’s not lost on us — the damage that increased energy bills did to the last government,” the same person added. Nonetheless, ministers are “making the right argument for voters,” they insisted. Some MPs vulnerable to Reform’s rise will hope such optimism is well placed. “Wages are low in South West Norfolk and costs are high,” said Terry Jermy, the Labour MP who pinched the seat from Conservative former Prime Minister Liz Truss in July. “So naturally people are very cautious about anything that might cost them money, and that includes measures to reach net zero.” Reform came third in his constituency but trailed Jermy by less than 2,000 votes. He backs the green push nonetheless. Climate change will be “just as important in four years’ time, or of even greater importance,” he said. MORE THAN BILLS Reform is seizing on public disenchantment with other aspects of the green transition, too, including unpopular plans to build hundreds of miles of overhead electricity cables, crucial to hitting net zero goals. Voters in his Skegness constituency are “furious, absolutely furious” about the prospect of new pylons, Tice said. “I do think [Labour] should be worried, and I think Reform think [net zero] is an issue that they can make political hay with,” said Scarlett Maguire, director at JL Partners polling firm. “They were keen to push this before the election. They’re keen to push it after,” she added. People must “feel better off as a result of the changes that are happening,” said Bill Esterson, a Labour MP and chair of parliament’s Energy Security and Net Zero Committee. “People will support warmer homes, cleaner air and lower bills and the net zero that will follow. But the government must make [the] case for the practical benefits of its policies and take people with it.” GREEN WEDGE  Reform isn’t just targeting Labour. There is a growing green wedge at the heart of Westminster and the party has set its sights on the opposition Conservatives. “A quarter to a third of the existing [Conservative] parliamentary party would happily scrap net zero,” Tice said. “The rest are woke Liberal Democrats who think it’s the greatest thing since sliced bread — so they’ve got a massive problem.” The Tories did not respond to a request for comment. Under new leader Kemi Badenoch — who calls herself a “net zero skeptic” — the party has shifted away from some of the green policies it adopted in government, disowning one of their party’s biggest legacies: signing the net zero target into law under Prime Minister Theresa May in 2019. That was “a mistake,” Badenoch said. The government and opposition are both still struggling to get to grips with Reform, believes Tryl. “I don’t think the other two parties have found a very good way of holding Reform to account in the way that they would one another,” he said. One key thing for the government, he argued, is not straying into a “crouchy, defensive mode” when it comes under attack over net zero. Tryl said: “If they’re going to beat Reform on this — [and] indeed if the Tories become more climate skeptic — [Labour] have got to be quite robust about: ‘This is central to our mission and making the country a better place.’” Additional reporting from Leicester by Andrew McDonald.

Europe’s next national leader looks likely to come from the far right. With Herbert Kickl in pole position to become chancellor of Austria, the European Union’s establishment is bracing for fresh torment ― and another punch in the guts in its stand against Russia’s Vladimir Putin. Kickl, who would become Austria’s first far-right leader since World War II, has made no secret of admiring Hungarian Prime Minister Victor Orbán and is likely to follow a similar playbook: cozying up to the Kremlin, clashing with the EU mainstream, and pursuing hardline policies in areas like migration. If his Freedom Party (FPÖ) takes charge, it would mean a swathe of the EU, from Hungary through Austria to Slovakia under outspoken Prime Minister Robert Fico ― and potentially to the Czech Republic, where former Prime Minister Andrej Babiš is leading in polls ahead of an election in October ― would be sympathetic toward Russia three years into Putin’s full-scale invasion of Ukraine. It also brings back disturbing memories for Brussels, which in 2000 saw the FPÖ under one of Kickl’s predecessors, Jörg Haider, become part of Austria’s governing coalition. At the time, other governments within the EU broke off bilateral contacts with Vienna. Should he become chancellor, Kickl goes one better than Haider. On Tuesday he fired the starting gun on coalition talks with the center-right Austrian People’s Party (ÖVP) following the breakdown of negotiations among mainstream parties. ‘THIRD WORLD WAR’ The similarities between Kickl and Orbán, whom he has called a “role model,” are striking. Just like Orbán, the FPÖ is banking on Russian gas, is highly critical of sanctions against Russia, and wants to cut aid to Ukraine. What’s worrying for the EU, especially in areas where agreement among all 27 governments is needed, is that the duo would likely work together to block major initiatives. Orbán has been an irritant to Brussels for years, but while he has ultimately often bowed to political pressure ― such as on EU enlargement just over a year ago ― Hungary and Austria combined could be a force to be reckoned with. It’s not hard to imagine that the first victim could be Ukraine.   “The European Union is currently pursuing a course of escalation at every turn, which could end in a third world war,” Kickl’s party program reads. Just like Viktor Orbán, the FPÖ is banking on Russian gas, is highly critical of sanctions against Russia, and wants to cut aid to Ukraine. | Attila Kisbenedek/Getty Images Sanctions on Russia make the EU “partly to blame” for the “suffering and death in Ukraine and Russia” and only fuel further conflict, according to Harald Vilimsky, the FPÖ’s lead candidate for the EU election and a member of the European Parliament. Kickl’s party echoes U.S. President-elect Donald Trump in saying the EU should embrace a “peace policy” to force Ukraine to the negotiation table. The party has pledged to block any aid to Ukraine though the European Peace Facility ― a pot of cash for security. In 2016 the party even signed a “friendship agreement” with Putin’s United Russia party in which the two sides agreed to exchange information and to hold regular joint consultations. ECHOES OF THE NAZI PERIOD While Kickl stressed after Russia’s February 2022 invasion of Ukraine that this friendship agreement has since expired, the party still holds a favorable view of Russia. Visits by Orbán and Fico to Moscow were described as “real peace diplomacy” by the Austrian far right. Kickl, who proclaimed himself the people’s chancellor, or Volkskanzler, during the 2024 election campaign ― the term came to prominence when the Nazis seized power in Germany in 1933 ― is also eyeing a complete revamp of Austria’s asylum system. He has vowed to preserve the “homogeneity” of the Austrian people by suspending the right of asylum though an “emergency law,” and by pushing for the “consistent remigration” of asylum seekers. This would be a clear violation of EU law. The party’s program advocates the placement of European migration centers in third countries for “millions of people,” and the halting of payments to the EU if the bloc doesn’t keep its promise to “protect” its external borders. The FPÖ is also aiming to unravel the European Green Deal, a set of EU policies aimed at making the bloc carbon neutral, which it deems one of the major causes of Europe’s lack of competitiveness. “The corset of EU regulations must be broken,” the party program reads. PRECEDENT FOR GERMANY In Germany, the far-right Alternative for Germany (AfD), polling second in the runup to February’s election, is celebrating. While the AfD and FPÖ don’t sit in the same pan-European group in the European Parliament, they are closely aligned, fueling fears in Berlin that Austria could set a precedent for Europe’s largest economy and closest neighbor. In Germany, the far-right Alternative for Germany, polling second in the runup to February’s election, is celebrating. | Maja Hitij/Getty Images Kickl’s appointment to form a government has been criticized across the political spectrum in Germany. “A look at Austria shows what happens when you are no longer able to form an alliance,” German Economy Minister Robert Habeck of the Greens told Deutschlandfunk public radio. On the other hand, Alice Weidel, co-leader of the AfD, has called on the German center right to tear down the cordon sanitaire and consider entering a coalition government, a plea the conservatives have so far steadfastly refused.

Germany’s election campaign is turning into a fervent ideological clash over starkly differing economic visions. As Germans become increasingly worried about their country’s ailing economy  — set to contract for the second year in a row — the question of how to rekindle growth is shaping up to be the most urgent and contentious issue ahead of the vote, set for Feb. 23. “The country is losing competitiveness,” conservative leader Friedrich Merz said on Tuesday during the presentation of his alliance’s election program. “We need a stable government that is capable of taking action.” As large-scale layoffs in German industry begin to bite, and iconic companies such as Volkswagen threaten plant closures, it’s domestic issues — not the war in Ukraine or Germany’s role in Europe — that are dominating the campaign. The issue most concerning Germans ahead of the election is the economy, according to one recent poll for public television, followed by migration. Russia’s war on Ukraine was fourth on the list. All the parties are vowing to restore the glory days of German industrial growth, but they have starkly competing visions for how to do so. WILDLY DIFFERING PLANS Merz — who leads the center-right Christian Democratic Union (CDU) and is in pole position to become the country’s next chancellor — proposes to significantly lower income taxes, as well as cutting the corporate tax rate to a maximum of 25 percent. He also wants to cut social benefits that he argues discourage people from working, and to cut regulations. These changes, he says, would foster the private investment that would help stimulate the economy. The fiscally conservative Free Democratic Party (FDP), has a similar policy prescription, proposing cutting taxes for most earners as well as for companies. It also wants to put an end to subsidies for renewable energies, while reviving the country’s nuclear power plants. The current German chancellor, Olaf Scholz, and his center-left Social Democratic Party (SPD), on the other hand, are pushing for big public investments to spark industrial growth. On Tuesday, Scholz proposed a €100 billion investment fund resembling the Inflation Reduction Act in the U.S. and pledged to increase the minimum wage to €15 per hour from €12. The goal is for Germany to remain “a successful, strong industrialized country, even in 10, 20 or 30 years from now,” Scholz said. At the same time, the SPD is calling for tax cuts for most earners and hikes on the rich, while also proposing a “Made in Germany” premium that subsidizes companies’ investments in equipment via a direct tax refund of 10 percent of the purchase price. The Greens are proposing a “Germany fund” to finance investments in the country’s infrastructure and to bring down the electricity tax to the European minimum. | Tobias Schwarz/AFP via Getty Images The Greens are proposing a “Germany fund” to finance investments in the country’s infrastructure and to bring down the electricity tax to the European minimum. The fund, according to the party’s program, will “guarantee the younger generation a modern, functioning and climate-neutral country and a competitive economy instead of leaving them with deferred burdens and dilapidated infrastructure.” WILL ANY OF IT WORK? Economists have raised questions about whether the plans are ambitious enough to confront the structural problems ailing Germany’s economy — high energy costs that are hitting energy-intensive industry and the breakdown of free trade that is core to the country’s export-oriented economy. There’s also the question of how to pay for it. Both the SPD and the Greens ulimately wish to unleash public investment by reforming the country’s debt brake, which limits the structural budget deficit to 0.35 percent of GDP, except in times of emergency. The CDU, on the other hand, wants to adhere to those spending rules, arguing in its party manifesto, that “the debts of today are the tax increases of tomorrow.” German economists have criticised the parties’ plans as promising more than they can deliver, though Merz’s tax cuts have come under particular criticism. Economists and Merz’s opponents estimate the conservatives’ proposed tax cuts will add up to as much as €100 billion annually, and many say that economic growth won’t be anywhere near robust enough to offset the lost revenue, as Merz argues it will. When asked about the criticism, Merz, however, argued “the decisive factor is to restore Germany’s willingness to perform and its ability to grow.” Then, he explained, the financing issues would appear “in a completely different light.”

Their worst nightmare is now a burning reality.  Climate diplomats and top-ranking activists on Wednesday struggled to project calm as it became inevitable: Donald Trump is returning to the White House. Trump — a man who has ridiculed climate concerns, promised to rip up U.S. participation in the Paris climate accord and vowed to extract fossil fuels without limit — will, once again, be a major determinant of whether the world slows climate change fast enough. The morning of his victory, however, saw a barrage of statements talking down Trump’s likely impact on plans to slow greenhouse gas emissions, in an attempt to calm nervous clean technology markets and to present the transition as a fait accompli. “Those investing in clean energy are already enjoying huge wins in terms of jobs and wealth, and cheaper, more secure energy. This is because the global energy transition is inevitable and gathering pace, making it among the greatest economic opportunities of our age,” said United Nations climate chief Simon Stiell. The challenge is that the world isn’t moving quickly enough to prevent dangerous global warming, and any slowdown from the world’s second-largest emitter — itself a major driver of the global shift to clean energy — is bound to throw a wrench into global climate efforts. Trump hinted at what was coming in his victory speech early Wednesday morning, touting America’s abundant supplies of “liquid gold.” Addressing Robert F. Kennedy Jr., the environmental lawyer who appears likely to bring his unorthodox views on healthcare to the heart of a Trump administration, Trump said: “Bobby, leave the oil to me.” Others rushed to convince markets that the smart money was still on the clean energy transition, highlighting that advancements in green technology over the past decade had made fossil fuels increasingly uncompetitive. “Standing with oil and gas is the same as falling behind in a fast-moving world,” said Christiana Figueres, who served as the United Nations climate chief between 2010 and 2016. Governments around the world, meanwhile, searched for ways to express confidence. “We’ve heard from the U.N. that [Secretary-General António] Guterres is trying to bring some leaders from the Global South and the Global North together for a statement — just to say that we’re not wobbling,” said a senior European diplomat who negotiates at the UN climate talks.  A second European climate official confirmed that talks were ongoing among governments on issuing a collective response in the days ahead. Both officials were granted anonymity to speak about sensitive diplomacy.  Initial market movements in Europe on Wednesday morning, however, saw a rout in renewable energy companies over concerns that Trump may block them from the U.S. market with tariffs, and that he could eviscerate Biden-era green subsidies. German Vice-Chancellor Robert Habeck told reporters on Wednesday that the U.S. and EU were “partners and allies. It’s important on this day to wake up to the fact that we benefit and win when we work together and that we hurt each other when we do not. We will all only stand to lose if there is less cooperation.” IT’S ON EUROPE Trump’s victory throws much of the responsibility for pushing the world forward on climate efforts onto European countries, which are at the forefront of cutting emissions and providing climate finance. In some EU capitals there is recognition that engagement with China, the world’s largest emitter, will now fall to them. “If you look at the three biggest emitters both historically and currently, that’s China, the U.S. and Europe. Those three need to hold each other’s hands. And if one of the three is wobbling or uncertain, the other two need to hold fast,” said the senior European climate negotiator. “We don’t know what Trump’s going to do,” the diplomat added, “so for now, we’re going to keep calm and carry on.” If the 2016 U.S. presidential election caught the world’s climate advocates by surprise, Trump’s second ascent to the White House could hardly have been more dreaded.  In the U.S., green groups and Biden administration officials have been working to secure as much of the domestic agenda and funding for clean energy as possible. Abroad, however, most diplomats and advocates had one plan for this fateful day: hope that Kamala Harris wins. “Hope is not a strategy,” said Robert Orr, dean of the School of Public Policy at the University of Maryland and an advisor on climate change to U.N. Secretary-General Guterres. “Stitching together a leadership coalition that can rise to the moment is the name of the game.” TRUMPIAN TIMING  The election results come as some 100 world leaders are expected to attend next week’s COP29 climate talks, the annual U.N. summit that will now serve as a key first test of the rest of the world’s constancy. “I expect countries, including China, to reaffirm their commitment to the Paris Agreement at the start of COP29,” said Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute. “Unlike 2016, the global community is prepared for this. I am confident we will weather … the immediate impact, but I am worried about the long-term impact of this election.” The COP gatherings bring countries together to pledge greater action to combat climate change and to deliver the money that requires. But many of the world’s most powerful leaders are expected to opt out this year, including U.S. President Joe Biden. Trump, who yanked the U.S. out of the Paris Agreement in his first term, has pledged to do so again — and perhaps even to withdraw from the underlying U.N. convention, a prospect that could upset upcoming negotiations in Azerbaijan over how to drum up trillions of dollars in climate aid over the next decade. “It’s a huge threat,” said Michai Robertson, senior finance adviser to a coalition of small island nations known as AOSIS.  Less action from the world’s biggest economy — and its largest polluter since the industrial era — means everyone else will have to do more to fill the gap. And while the world has changed since Trump’s first term, countries in Europe don’t have the political or fiscal might to fill an America-sized hole in global climate efforts. As to what a Trump presidency would mean for actual global greenhouse gas emissions, scientists said that was too early to predict, as it depends not only on what Trump actually does in office, but also on how other nations and corporations respond. It’s “anyone’s guess what will happen,” said Glen Peters, a senior researcher at the Oslo-based Center for International Climate Research. “And that is perhaps the most concerning thing.” That reality left some activists unable to stomach the sanguine messaging of their peers. Speaking to Germany’s ZEIT newspaper, climate activist Luisa Neubauer shared a bald assessment.  “It’s going to suck,” she said.

Daniel Gros is director of the Institute for European Policymaking at Bocconi University. How to improve European competitiveness? According to former Central Bank President Mario Draghi’s long-awaited assessment, Europe can address its relative decline via a long list of economic reforms and a huge investment boost to be financed — at least partially — by common debt. And now that the report is out, it’s up to the new European Commission to drive this agenda forward. Starting from the transatlantic divide in productivity — due to the weakness of the EU’s high-tech industry — Draghi’s report recognizes that European enterprises are caught in a “middle-tech trap.” A term coined here, at the Institute for European Policymaking at Bocconi, this means that most large EU companies are in middle-tech sectors and remain languishing there because they don’t want to leave the field they know. The current travails of the German automotive sector, for example, clearly illustrates how this is a losing strategy. The report also shows that while the European economy has actually performed just as well as the U.S. outside of high-tech sectors, information technology, and communications, radical innovation is much weaker here, and has thus resulted in very few highly valued start-ups — so-called unicorns. And so, in response, Draghi proposes a number of small but significant steps to strengthen innovation — like the creation of a European equivalent to the U.S. Defense Advanced Research Project Agency, which has been credited with fostering key innovations like the internet. However, most of the report isn’t really about fostering innovation or the emergence of new industries. And where it is, it falls short. Rather than innovation, Draghi focuses on the defense of existing industries against Chinese competition. And though he does propose spending huge sums — it’s not on new high-tech sectors. The industrial policy — or “industrial vision” as he calls it — centers on the green economy with its “joint decarbonization and competitiveness plan.” But this is unlikely to work. Achieving the EU’s ambitious climate targets requires lowering the cost of known technologies like solar panels, wind turbines and batteries, however, the EU is unlikely to ever beat China at this game. It thus makes sense that Draghi recommends abandoning such sectors where China’s cost advantage is too big — even if due to subsidies. He does, however, consider the automotive industry, and potentially many other clean-tech sectors, too important to expose to unfettered Chinese competition. So, first, Draghi recommends tariffs to defend domestic producers, then — if China starts to invest in Europe — moving on to measures to enforce a transfer of technology. This is the exact approach used by China and that the EU has always criticized. Moreover, protecting clean tech at home is unlikely to generate a competitive industry, as the scale economies can only be reaped on the global market where there are no protections for EU producers. This also applies to the headline figure of €800 billion in additional annual investment that Draghi believes is required. The overall figure is poorly documented, with just one short table (relegated to page 282 of part two) showing that €450 billion — or over one half of the total — should be earmarked for the energy transition, and the remainder for digital, defense and innovation. And while supporting the energy transition is necessary, a large part of the remaining financing need actually comes from the residential sector, which is rather low tech. Mario Draghi’s report has been well received in the Brussels bubble. | Nicolas Tucat/AFP via Getty Images Furthermore, even though there’s an implicit call to spend €300 billion annually on digital and innovation in this table, there’s absolutely no indication as to what kind of projects or programs should be financed. Apart from scattered allusions to the need for subsidies, the only concrete indication is a throwaway line from earlier in the report, stating the funds for the European Research Council should be doubled. However, this would cost €3 billion, not €300 billion. Overall, Draghi’s report has been well received in the Brussels bubble. But that’s because when somebody recommends spending €800 billion, nobody’s looking at the fine print. So far, most discussions have revolved around who would favor common debt and who would be against it — and in this regard the initial reactions from various capitals were predictable. But the question of what exactly the common debt should finance, and how it would foster innovation has been sidelined — especially as there’s so little material on this in the report. Having asked for the report in the first place, the Commission got what it expected. Some of its recommendations even appear in the mission letters that Commission President Ursula von der Leyen addressed to the commissioner candidates — especially on competition and trade policy. And for a geopolitical Commission, it’s of course greatly attractive to obtain more latitude for its decisions on mergers and state aid rather than pursuing the unpopular task of constantly saying no to member states and large companies that want to dominate certain markets. However, whether this approach will actually foster European competitiveness remains to be seen.