LONDON — British ministers have been laying the ground for Keir Starmer’s handshake with Xi Jinping in Beijing this week ever since Labour came to power. In a series of behind-closed-door speeches in China and London, obtained by POLITICO, ministers have sought to persuade Chinese and British officials, academics and businesses that rebuilding the trade and investment relationship is essential — even as economic security threats loom. After a “Golden Era” in relations trumpeted by Tory Prime Minister David Cameron, Britain’s once-close ties to the Asian superpower began to unravel in the late 2010s. By 2019, Boris Johnson had frozen trade and investment talks after a Beijing-led crackdown on Hong Kong’s democracy movement. At Donald Trump’s insistence, Britain stripped Chinese telecoms giant Huawei from its telecoms infrastructure over security concerns. Starmer — who is expected to meet Xi on a high-stakes trip to Beijing this week — set out to revive an economic relationship that had hit the rocks. The extent of the reset undertaken by the PM’s cabinet is revealed in the series of speeches by ministers instrumental to his China policy over the past year, including Chancellor Rachel Reeves, then-Foreign Secretary David Lammy, Energy Secretary Ed Miliband, and former Indo-Pacific, investment, city and trade ministers. Months before security officials completed an audit of Britain’s exposure to Chinese interference last June, ministers were pushing for closer collaboration between the two nations on energy and financial systems, and the eight sectors of Labour’s industrial strategy. “Six of those eight sectors have national security implications,” said a senior industry representative, granted anonymity to speak freely about their interactions with government. “When you speak to [the trade department] they frame China as an opportunity. When you speak to the Foreign, Commonwealth and Development Office, it’s a national security risk.”  While Starmer’s reset with China isn’t misguided, “I think we’ve got to be much more hard headed about where we permit Chinese investment into the economy in the future,” said Labour MP Liam Byrne, chair of the House of Commons Business and Trade Committee. Lawmakers on his committee are “just not convinced that the investment strategy that is unfolding between the U.K. and China is strong enough for the future and increased coercion risks,” he said. As Trump’s tariffs bite, Beijing’s trade surplus is booming and “we’ve got to be realistic that China is likely to double down on its Made in China approach and target its export surplus at the U.K.,” Byrne said. China is the U.K.’s fifth-largest trade partner, and data to June of last year show U.K. exports to China dropping 10.4 percent year-on-year while imports rose 4.3 percent. “That’s got the real potential to flood our markets with goods that are full of Chinese subsidies, but it’s also got the potential to imperil key sectors of our economy, in particular the energy system,” Byrne warned. A U.K. government spokesperson said: “Since the election, the Government has been consistently transparent about our approach to China – which we are clear will be grounded in strength, clarity and sober realism. “We will cooperate where we can and challenge where we must, never compromising on our national security. We reject the old ‘hot and cold’ diplomacy that failed to protect our interests or support our growth.” While Zheng Zeguang’s speech was released online, the Foreign Office refused to provide Catherine West’s own address when requested at the time. | Jordan Pettitt/PA Images via Getty Images CATHERINE WEST, INDO-PACIFIC MINISTER, SEPTEMBER 2024 Starmer’s ministers began resetting relations in earnest on the evening of Sept. 25, 2024 at the luxury Peninsula Hotel in London’s Belgravia, where rooms go for £800 a night. Some 400 guests, including a combination of businesses, British government and Chinese embassy officials, gathered to celebrate the 75th anniversary of the People’s Republic of China — a milestone for Chinese Communist Party (CCP) rule. “I am honored to be invited to join your celebration this evening,” then Indo-Pacific Minister Catherine West told the room, kicking off her keynote following a speech by China’s ambassador to the U.K., Zheng Zeguang.  “Over the last 75 years, China’s growth has been exponential; in fields like infrastructure, technology and innovation which have reverberated across the globe,” West said, according to a Foreign Office briefing containing the speech obtained through freedom of information law. “Both our countries have seen the benefits of deepening our trade and economic ties.”  While London and Beijing won’t always see eye-to-eye, “the U.K. will cooperate with China where we can. We recognise we will also compete in other areas — and challenge where we need to,” West told the room, including 10 journalists from Chinese media, including Xinhua, CGTN and China Daily. While Zheng’s speech was released online, the Foreign Office refused to provide West’s own address when requested at the time. Freedom of information officers later provided a redacted briefing “to protect information that would be likely to prejudice relations.” DAVID LAMMY, FOREIGN SECRETARY, OCTOBER 2024 As foreign secretary, David Lammy made his first official overseas visit in the job with a two-day trip to Beijing and Shanghai. He met Chinese Foreign Minister Wang Yi in Beijing on Oct. 18, a few weeks before U.S. President Donald Trump’s re-election. Britain and China’s top diplomats discussed climate change, trade and global foreign policy challenges. “I met with Director Wang Yi yesterday and raised market access issues with him directly,” Lammy told a roundtable of British businesses at Shanghai’s Regent On The Bund hotel the following morning, noting that he hoped greater dialogue between the two nations would break down trade barriers. “At the same time, I remain committed to protecting the U.K.’s national security,” Lammy said. “In most sectors of the economy, China brings opportunities through trade and investment, and this is where continued collaboration is of great importance to me,” he told firms. Freedom of information officers redacted portions of Lammy’s speech so it wouldn’t “prejudice relations” with China.  Later that evening, the then-foreign secretary gave a speech at the Jean Nouvel-designed Pudong Museum of Art to 200 business, education, arts and culture representatives. China is “the world’s biggest emitter” of CO2, Lammy told them in his prepared remarks obtained by freedom of information law. “But also the world’s biggest producer of renewable energy. This is a prime example of why I was keen to visit China this week. And why this government is committed to a long-term, strategic approach to relations.” Shanghai continues “to play a key role in trade and investment links with the rest of the world as well,” he said, pointing to the “single biggest” ever British investment in China: INEOS Group’s $800 million plastics plant in Zhejiang. “We welcome Chinese investment for clear mutual benefit the other way too,” Lammy said. “This is particularly the case in clean energy, where we are both already offshore wind powerhouses and the costs of rolling out more clean energy are falling rapidly.” “We welcome Chinese investment for clear mutual benefit the other way too,” David Lammy said. | Adam Vaughan/EPA POPPY GUSTAFSSON, INVESTMENT MINISTER, NOVEMBER 2024 Just days after Starmer and President Xi met for the first time at the G20 that November, Poppy Gustafsson, then the British investment minister, told a U.K.-China trade event at a luxury hotel on Mayfair’s Park Lane that “we want to open the door to more investment in our banking and insurance industries.” The event, co-hosted by the Bank of China UK and attended by Chinese Ambassador Zheng Zeguang and 400 guests, including the U.K. heads of several major China business and financial institutions, is considered the “main forum for U.K.-China business discussion,” according to a briefing package prepared for Gustafsson. “We want to see more green initiatives like Red Rock Renewables who are unlocking hundreds of megawatts in new capacity at wind farms off the coast of Scotland — boosting this Government’s mission to become a clean energy superpower by 2030,” Gustafsson told attendees, pointing to the project owned by China’s State Development and Investment Group. The number one objective for her speech, officials instructed the minister, was to “affirm the importance of engaging with China on trade and investment and cooperating on shared multilateral interests.” And she was told to “welcome Chinese investment which supports U.K. growth and the domestic industry through increased exports and wider investment across the economy and in the Industrial Strategy priority sectors.” The Chinese government published a readout of Gustafsson and Zheng’s remarks. RACHEL REEVES, CHANCELLOR, JANUARY 2025 By Jan. 11 last year, Chancellor Rachel Reeves was in Beijing with British financial and professional services giants like Abrdn, Standard Chartered, KPMG, the London Stock Exchange, Barclays and Bank of England boss Andrew Bailey in tow. She was there to meet with China’s Vice-Premier He Lifeng to reopen one of the key financial and investment talks with Beijing Boris Johnson froze in 2019. Before Reeves and He sat down for the China-U.K. Economic and Financial Dialogue, Britain’s chancellor delivered an address alongside the vice-premier to kick off a parallel summit for British and Chinese financial services firms, according to an agenda for the summit shared with POLITICO. Reeves was also due to attend a dinner the evening of the EFD and then joined a business delegation travelling to Shanghai where she held a series of roundtables. Releasing any of her remarks from these events through freedom of information law “would be likely to prejudice” relations with China, the Treasury said. “It is crucial that HM Treasury does not compromise the U.K.’s interests in China.” Reeves’ visit to China paved the way for the revival of a long-dormant series of high-level talks to line up trade and investment wins, including the China-U.K. Energy Dialogue in March and U.K.-China Joint Economic and Trade Commission (JETCO) last September. EMMA REYNOLDS, CITY MINISTER, MARCH 2025 “Growth is the U.K. government’s number one mission. It is the foundation of everything else we hope to achieve in the years ahead. We recognise that China will play a very important part in this,” Starmer’s then-City Minister Emma Reynolds told the closed-door U.K.-China Business Forum in central London early last March. Reeves’ restart of trade and investment talks “agreed a series of commitments that will deliver £600 million for British businesses,” Reynolds told the gathering, which included Chinese electric vehicle firm BYD, HSBC, Standard Chartered, KPMG and others. This would be achieved by “enhancing links between our financial markets,” she said. “As the world’s most connected international financial center and home to world-leading financial services firms, the City of London is the gateway of choice for Chinese financial institutions looking to expand their global reach,” Reynolds said. Ed Miliband traveled to Beijing in mid-March for the first China-U.K. Energy Dialogue since 2019. | Tolga Akmen/EPA ED MILIBAND, ENERGY AND CLIMATE CHANGE SECRETARY, MARCH 2025 With Starmer’s Chinese reset in full swing, Energy Secretary Ed Miliband traveled to Beijing in mid-March for the first China-U.K. Energy Dialogue since 2019. Britain’s energy chief wouldn’t gloss over reports of human rights violations in China’s solar supply chain — on which the U.K. is deeply reliant for delivering its lofty renewables goals — when he met with China’s Vice Premier Ding Xuexiang, a British government official said at the time. “We maybe agree to disagree on some things,” they said. But the U.K. faces “a clean energy imperative,” Miliband told students and professors during a lecture at Beijing’s elite Tsinghua University, which counts Xi Jinping and former Chinese President Hu Jintao as alumni. “The demands of energy security, affordability and sustainability now all point in the same direction: investing in clean energy at speed and at scale,” Miliband said, stressing the need for deeper U.K.-China collaboration as the U.K. government reaches towards “delivering a clean power system by 2030.”  “In the eight months since our government came to office we have been speeding ahead on offshore wind, onshore wind, solar, nuclear, hydrogen and [Carbon Capture, Usage, and Storage],” Britain’s energy chief said. “Renewables are now the cheapest form of power to build and operate — and of course, much of this reflects technological developments driven by what is happening here in China.”  “The U.K. and China share a recognition of the urgency of acting on the climate crisis in our own countries and accelerating this transition around the world — and we must work together to do so,” Miliband said, in his remarks obtained through freedom of information law. DOUGLAS ALEXANDER, ECONOMIC SECURITY MINISTER, APRIL 2025 During a trip to China in April last year, then-Trade Minister Douglas Alexander met his counterpart to prepare to relaunch key trade and investment talks. The trip wasn’t publicized by the U.K. side. According to a Chinese government readout, the China-UK Joint Economic and Trade Commission would promote “cooperation in trade and investment, and industrial and supply chains” between Britain’s trade secretary and his Chinese equivalent. After meeting Vice Minister and Deputy China International Trade Representative Ling Ji, Minister Alexander gave a speech at China’s largest consumer goods expo near the country’s southernmost point on the island province of Hainan. Alexander extended his “sincere thanks” to China’s Ministry of Commerce and the Hainan Provincial Government “for inviting the U.K. to be the country of honour at this year’s expo.” “We must speak often and candidly about areas of cooperation and, yes, of contention too, where there are issues on which we disagree,” the trade policy and economic security minister said, according to a redacted copy of his speech obtained under freedom of information law. “We are seeing joint ventures and collaboration between Chinese and U.K. firms on a whole host of different areas … in renewable energy, in consumer goods, and in banking and finance,” Alexander later told some of the 27 globally renowned British retailers, including Wedgwood, in another speech during the U.K. pavilion opening ceremony. “We are optimistic about the potential for deeper trade and investment cooperation — about the benefits this will bring to the businesses showcasing here, and those operating throughout China’s expansive market.”

BRUSSELS — Donald Trump blew up global efforts to cut emissions from shipping, and now the EU is terrified the U.S. president will do the same to any plans to tax carbon emissions from long-haul flights. The European Commission is studying whether to expand its existing carbon pricing scheme that forces airlines to pay for emissions from short- and medium-haul flights within Europe into a more ambitious effort covering all flights departing the bloc. If that happens, all international airlines flying out of Europe — including U.S. ones — would face higher costs, something that’s likely to stick in the craw of the Trump administration. “God only knows what the Trump administration will do” if Brussels expands its own Emissions Trading System to include transatlantic flights, a senior EU official told POLITICO. A big issue is how to ensure that the new system doesn’t end up charging only European airlines, which often complain about the higher regulatory burden they face compared with their non-EU rivals. The EU official said Commission experts are now “scratching their heads how you can, on the one hand, talk about extending the ETS worldwide … [but] also make sure that you have a bit of a level playing field,” meaning a system that doesn’t only penalize European carriers. Any new costs will hit airlines by 2027, following a Commission assessment that will be completed by July 1. Brussels has reason to be worried.  “Trump has made it very clear that he does not want any policies that harm business … So he does not want any environmental regulation,” said Marina Efthymiou, aviation management professor at Dublin City University. “We do have an administration with a bullying behavior threatening countries and even entities like the European Commission.” The new U.S. National Security Strategy, released last week, closely hews to Trump’s thinking and is scathing on climate efforts. “We reject the disastrous ‘climate change’ and ‘Net Zero’ ideologies that have so greatly harmed Europe, threaten the United States, and subsidize our adversaries,” it says. In October, the U.S. led efforts to prevent the International Maritime Organization from setting up a global tax to encourage commercial fleets to go green. The no-holds-barred push was personally led by Trump and even threatened negotiators with personal consequences if they went along with the measure. In October, the U.S. led efforts to prevent the International Maritime Organization from setting up a global tax aimed at encouraging commercial fleets to go green. | Nicolas Tucat/AFP via Getty Images This “will be a parameter to consider seriously from the European Commission” when it thinks about aviation, Efthymiou said. The airline industry hopes the prospect of a furious Trump will scare off the Commission. “The EU is not going to extend ETS to transatlantic flights because that will lead to a war,” said Willie Walsh, director general of the International Air Transport Association, the global airline lobby, at a November conference in Brussels. “And that is not a war that the EU will win.” EUROPEAN ETS VS. GLOBAL CORSIA In 2012, the EU began taxing aviation emissions through its cap-and-trade ETS, which covers all outgoing flights from the European Economic Area — meaning EU countries plus Iceland, Liechtenstein and Norway. Switzerland and the U.K. later introduced similar schemes. In parallel, the U.N.’s International Civil Aviation Organization was working on its own carbon reduction plan, the Carbon Offsetting and Reduction Scheme for International Aviation. Given that fact, Brussels delayed imposing the ETS on flights to non-European destinations. The EU will now be examining the ICAO’s CORSIA to see if it meets the mark. “CORSIA lets airlines pay pennies for pollution — about €2.50 per passenger on a Paris-New York flight,” said Marte van der Graaf, aviation policy officer at green NGO Transport & Environment. Applying the ETS on the same route would cost “€92.40 per passenger based on 2024 traffic.” There are two reasons for such a big difference: the fourfold higher price for ETS credits compared with CORSIA credits, and the fact that “under CORSIA, airlines don’t pay for total emissions, but only for the increase above a fixed 2019 baseline,” Van der Graaf explained. “Thus, for a Paris-New York flight that emits an average of 131 tons of CO2, only 14 percent of emissions are offset under CORSIA. This means that, instead of covering the full 131 tons, the airline only has to purchase credits for approximately 18 tons.” Efthymiou, the professor, warned the price difference is projected to increase due to the progressive withdrawal of free ETS allowances granted to aviation. The U.N. scheme will become mandatory for all U.N. member countries in 2027 but will not cover domestic flights, including those in large countries such as the U.S., Russia and China. KEY DECISIONS By July 1, the Commission must release a report assessing the geographical coverage and environmental integrity of CORSIA. Based on this evaluation, the EU executive will propose either extending the ETS to all departing flights from the EU starting in 2027 or maintaining it for intra-EU flights only. Opposition to the ETS in the U.S. dates back to the Barack Obama administration. | Pete Souza/White House via Getty Images According to T&E, CORSIA doesn’t meet the EU’s climate goals. “Extending the scope of the EU ETS to all departing flights from 2027 could raise an extra €147 billion by 2040,” said Van der Graaf, noting that this money could support the production of greener aviation fuels to replace fossil kerosene. But according to Efthymiou, the Commission might decide to continue the current exemption “considering the very fragile political environment we currently have with a lunatic being in power,” she said, referring to Trump. “CORSIA has received a lot of criticism for sure … but the importance of CORSIA is that for the first time ever we have an agreement,” she added. “Even though that agreement might not be very ambitious, ICAO is the only entity with power to put an international regulation [into effect].” Regardless of what is decided in Brussels, Washington is prepared to fight. Opposition to the ETS in the U.S. dates back to the Barack Obama administration, when then-Secretary of State Hillary Clinton sent a letter to the Commission opposing its application to American airlines. During the same term, the U.S. passed the EU ETS Prohibition Act, which gives Washington the power to prohibit American carriers from paying for European carbon pricing. John Thune, the Republican politician who proposed the bill, is now the majority leader of the U.S. Senate.

A fair, fast and competitive transition begins with what already works and then rapidly scales it up.  Across the EU commercial road transport sector, the diversity of operations is met with a diversity of solutions. Urban taxis are switching to electric en masse. Many regional coaches run on advanced biofuels, with electrification emerging in smaller applications such as school services, as European e-coach technologies are still maturing and only now beginning to enter the market. Trucks electrify rapidly where operationally and financially possible, while others, including long-haul and other hard-to-electrify segments, operate at scale on HVO (hydrotreated vegetable oil) or biomethane, cutting emissions immediately and reliably. These are real choices made every day by operators facing different missions, distances, terrains and energy realities, showing that decarbonization is not a single pathway but a spectrum of viable ones.  Building on this diversity, many operators are already modernizing their fleets and cutting emissions through electrification. When they can control charging, routing and energy supply, electric vehicles often deliver a positive total cost of ownership (TCO), strong reliability and operational benefits. These early adopters prove that electrification works where the enabling conditions are in place, and that its potential can expand dramatically with the right support. > Decarbonization is not a single pathway but a spectrum of viable ones chosen > daily by operators facing real-world conditions. But scaling electrification faces structural bottlenecks. Grid capacity is constrained across the EU, and upgrades routinely take years. As most heavy-duty vehicle charging will occur at depots, operators cannot simply move around to look for grid opportunities. They are bound to the location of their facilities.  The recently published grid package tries, albeit timidly, to address some of these challenges, but it neither resolves the core capacity deficiencies nor fixes the fundamental conditions that determine a positive TCO: the predictability of electricity prices, the stability of delivered power, and the resulting charging time. A truck expected to recharge in one hour at a high-power station may wait far longer if available grid power drops. Without reliable timelines, predictable costs and sufficient depot capacity, most transport operators cannot make long-term investment decisions. And the grid is only part of the enabling conditions needed: depot charging infrastructure itself requires significant additional investment, on top of vehicles that already cost several hundreds of thousands of euros more than their diesel equivalents.  This is why the EU needs two things at once: strong enablers for electrification and hydrogen; and predictability on what the EU actually recognizes as clean. Operators using renewable fuels, from biomethane to advanced biofuels and HVO, delivering up to 90 percent CO2 reduction, are cutting emissions today. Yet current CO2 frameworks, for both light-duty vehicles and heavy-duty trucks, fail to recognize fleets running on these fuels as part of the EU’s decarbonization solution for road transport, even when they deliver immediate, measurable climate benefits. This lack of clarity limits investment and slows additional emission reductions that could happen today. > Policies that punish before enabling will not accelerate the transition; a > successful shift must empower operators, not constrain them. The revision of both CO2 standards, for cars and vans, and for heavy-duty vehicles, will therefore be pivotal. They must support electrification and hydrogen where they fit the mission, while also recognizing the contribution of renewable and low-carbon fuels across the fleet. Regulations that exclude proven clean options will not accelerate the transition. They will restrict it.  With this in mind, the question is: why would the EU consider imposing purchasing mandates on operators or excessively high emission-reduction targets on member states that would, in practice, force quotas on buyers? Such measures would punish before enabling, removing choice from those who know their operations best. A successful transition must empower operators, not constrain them.  The EU’s transport sector is committed and already delivering. With the right enablers, a technology-neutral framework, and clarity on what counts as clean, the EU can turn today’s early successes into a scalable, fair and competitive decarbonization pathway.  We now look with great interest to the upcoming Automotive Package, hoping to see pragmatic solutions to these pressing questions, solutions that EU transport operators, as the buyers and daily users of all these technologies, are keenly expecting. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is IRU – International Road Transport Union  * The ultimate controlling entity is IRU – International Road Transport Union  More information here.

High energy prices, risks on CBAM enforcement and promotion of lead markets, as well as increasing carbon costs are hampering domestic and export competitiveness with non-EU producers. The cement industry is fundamental to Europe’s construction value chain, which represents about 9 percent of the EU’s GDP. Its hard-to-abate production processes are also currently responsible for 4 percent of EU emissions, and it is investing heavily in measures aimed at achieving full climate neutrality by 2050, in line with the European Green Deal. Marcel Cobuz, CEO, TITAN Group  “We should take a longer view and ensure that the cement industry in EU stays competitive domestically and its export market shares are maintained.” However, the industry’s efforts to comply with EU environmental regulations, along with other factors, make it less competitive than more carbon-intensive producers from outside Europe. Industry body Cement Europe recently stated that, “without a competitive business model, the very viability of the cement industry and its prospects for industrial decarbonization are at risk.” Marcel Cobuz, member of the Board of the Global Cement and Concrete Association and CEO of TITAN Group, one of Europe’s leading producers, spoke with POLITICO Studio about the vital need for a clear policy partnership with Brussels to establish a predictable regulatory and financing framework to match the industry’s decarbonization ambitions and investment efforts to stay competitive in the long-term. POLITICO Studio: Why is the cement industry important to the EU economy?  Marcel Cobuz: Just look around and you will see how important it is. Cement helped to build the homes that we live in and the hospitals that care for us. It’s critical for our transport and energy infrastructure, for defense and increasingly for the physical assets supporting the digital economy. There are more than 200 cement plants across Europe, supporting nearby communities with high-quality jobs. The cement industry is also key to the wider construction industry, which employs 14.5 million people across the EU. At the same time, cement manufacturers from nine countries compete in the international export markets. PS: What differentiates Titan within the industry?  MC: We have very strong European roots, with a presence in 10 European countries. Sustainability is very much part of our DNA, so decarbonizing profitably is a key objective for us. We’ve reduced our CO2 footprint by nearly 25 percent since 1990, and we recently announced that we are targeting a similar reduction by 2030 compared to 2020. We are picking up pace in reducing emissions both by using conventional methods, like the use of alternative sources of low-carbon energy and raw materials, and advanced technologies. TITAN/photo© Nikos Daniilidis We have a large plant in Europe where we are exploring building one of the largest carbon capture projects on the continent, with support from the Innovation Fund, capturing close to two million tons of CO2 and producing close to three million tons of zero-carbon cement for the benefit of all European markets. On top of that, we have a corporate venture capital fund, which partners with startups from Europe to produce the materials of tomorrow with  very low or zero carbon. That will help not only TITAN but the whole industry to accelerate its way towards the use of new high-performance materials with a smaller carbon footprint. PS: What are the main challenges for the EU cement industry today?  MC: Several factors are making us less competitive than companies from outside the EU. Firstly, Europe is an expensive place when it comes to energy prices. Since 2021, prices have risen by close to 65 percent, and this has a huge impact on cement producers, 60 percent of whose costs are energy-related. And this level of costs is two to three times higher than those of our neighbors. We also face regulatory complexity compared to our outside competitors, and the cost of compliance is high. The EU Emissions Trading System (ETS) cost for the cement sector is estimated at €97 billion to €162 billion between 2023 and 2034. Then there is the need for low-carbon products to be promoted ― uptake is still at a very low level, which leads to an investment risk around new decarbonization technologies. > We should take a longer view and ensure that the cement industry in the EU > stays competitive domestically and its export market shares are maintained.” All in all, the playing field is far from level. Imports of cement into the EU have increased by 500 percent since 2016. Exports have halved ― a loss of value of one billion euros. The industry is reducing its cost to manufacture and to replace fossil fuels, using the waste of other industries, digitalizing its operations, and premiumizing its offers. But this is not always enough. Friendly policies and the predictability of a regulatory framework should accompany the effort. PS: In January 2026, the Carbon Border Adjustment Mechanism will be fully implemented, aimed at ensuring that importers pay the same carbon price as domestic producers. Will this not help to level the playing field? MC: This move is crucial, and it can help in dealing with the increasing carbon cost. However, I believe we already see a couple of challenges regarding the CBAM. One is around self-declaration: importers declare the carbon footprint of their materials, so how do we avoid errors or misrepresentations? In time there should be audits of the importers’ industrial installations and co-operation with the authorities at source to ensure the data flow is accurate and constant. It really needs to be watertight, and the authorities need to be fully mobilized to make sure the real cost of carbon is charged to the importers. Also, and very importantly, we need to ensure that CBAM does not apply to exports from the EU to third countries, as carbon costs are increasingly a major factor making us uncompetitive outside the EU, in markets where we were present for more than 20 years. > CBAM really needs to be watertight, and the authorities need to be fully > mobilized to make sure the real cost of carbon is charged to the importers.” PS: In what ways can the EU support the European cement industry and help it to be more competitive? MC: By simplifying legislation and making it more predictable so we can plan our investments for the long term. More specifically, I’m talking about the revamping of the ETS, which in its current form implies a phase-down of CO2 rights over the next decade. First, we should take a longer view and ensure that the cement industry stays competitive and its export market shares are maintained, so a policy of more for longer should accompany the new ETS. > In export markets, the policy needs to ensure a level playing field for > European suppliers competing in international destination markets, through a > system of free allowances or CBAM certificates, which will enable exports to > continue.” We should look at it as a way of funding decarbonization. We could front-load part of ETS revenues in a fund that would support the development of technologies such as low-carbon materials development and CCS. The roll-out of Infrastructure for carbon capture projects such as transport or storage should also be accelerated, and the uptake of low-carbon products should be incentivized. More specifically on export markets, the policy needs to ensure a level playing field for European suppliers competing in international destination markets, through a system of free allowances or CBAM certificates, which will enable exports to continue. PS: Are you optimistic about the future of your industry in Europe?  MC: I think with the current system of phasing out CO2 rights, and if the CBAM is not watertight, and if energy prices remain several times higher than in neighboring countries, and if investment costs, particularly for innovating new technologies, are not going to be financed through ETS revenues, then there is an existential risk for at least part of the industry. Having said that, I’m optimistic that, working together with the European Commission we can identify the right policy making solutions to ensure our viability as a strategic industry for Europe. And if we are successful, it will benefit everyone in Europe, not least by guaranteeing more high-quality jobs and affordable and more energy-efficient materials for housing ― and a more sustainable and durable infrastructure in the decades ahead. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Titan Group * The advertisement is linked to policy advocacy around industrial competitiveness, carbon pricing, and decarbonization in the EU cement and construction sectors, including the EU’s CBAM legislation, the Green Deal, and the proposed revision of the ETS. More information here.

BRUSSELS — Europe’s most energy-intensive industries are worried the European Union’s carbon border tax will go too soft on heavily polluting goods imported from China, Brazil and the United States — undermining the whole purpose of the measure. From the start of next year, Brussels will charge a fee on goods like cement, iron, steel, aluminum and fertilizer imported from countries with weaker emissions standards than the EU’s. The point of the law, known as the Carbon Border Adjustment Mechanism, is to make sure dirtier imports don’t have an unfair advantage over EU-made products, which are charged around €80 for every ton of carbon dioxide they emit. One of the main conundrums for the EU is how to calculate the carbon footprint of imports when the producers don’t give precise emissions data. According to draft EU laws obtained by POLITICO, the European Commission is considering using default formulas that EU companies say are far too generous. Two documents in particular have raised eyebrows. One contains draft benchmarks to assess the carbon footprint of imported CBAM goods, while the second — an Excel sheet seen by POLITICO — shows default CO2 emissions values for the production of these products in foreign countries. These documents are still subject to change. National experts from EU countries discussed the controversial texts last Wednesday during a closed-door meeting, and asked the Commission to rework them before they can be adopted. That’s expected to happen over the next few weeks, according to two people with knowledge of the talks. Multiple industry representatives told POLITICO that the proposed estimated carbon footprint values are too low for a number of countries, which risks undermining the efficiency of the CBAM. For example, some steel products from China, Brazil and the United States have much lower assumed emissions than equivalent products made in the EU, according to the tables. Ola Hansén, public affairs director of the green steel manufacturer Stegra, said he had been “surprised” by the draft default values that have been circulating, because they suggest that CO2 emissions for some steel production routes in the EU were higher than in China, which seemed “odd.” “Our recommendation would be [to] adjust the values, but go ahead with the [CBAM] framework and then improve it over time,” he said. Antoine Hoxha, director general of industry association Fertilizers Europe, also said he found the proposed default values “quite low” for certain elements, like urea, used to manufacture fertilizers. “The result is not exactly what we would have thought,” he said, adding there is “room for improvement.” But he also noted that the Commission is trying “to do a good job but they are extremely overwhelmed … It’s a lot of work in a very short period of time.” Multiple industry representatives told POLITICO that the proposed estimated carbon footprint values are too low for a number of countries, which risks undermining the efficiency of the CBAM. | Photo by VCG via Getty Images While a weak CBAM would be bad for many emissions-intensive, trade-exposed industries in the EU, it’s likely to please sectors relying on cheap imports of CBAM goods — such as European farmers that import fertilizer — as well as EU trade partners that have complained the measure is a barrier to global free trade. The European Commission declined to comment. DEFAULT VERSUS REAL EMISSIONS Getting this data right is crucial to ensure the mechanism works and encourages companies to lower their emissions to pay a lower CBAM fee. “Inconsistencies in the figures of default values and benchmarks would dilute the incentive for cleaner production processes and allow high-emission imports to enter the EU market with insufficient carbon costs,” said one CBAM industry representative, granted anonymity to discuss the sensitive talks. “This could result in a CBAM that is not only significantly less effective but most likely counterproductive.” The default values for CO2 emissions are like a stick. When the legislation was designed, they were expected to be set quite high to “punish importers that are not providing real emission data,” and encourage companies to report their actual emissions to pay a lower CBAM fee, said Leon de Graaf, acting president of the Business for CBAM Coalition. But if these default values are too low then importers no longer have any incentive to provide their real emissions data. They risk making the CBAM less effective because it allows imported goods to appear cleaner than they really are, he said. The Commission is under pressure to adopt these EU acts quickly as they’re needed to set the last technical details for the implementation of the CBAM, which applies from Jan. 1. However, de Graaf warned against rushing that process. On the one hand, importers “needed clarity yesterday” because they are currently agreeing import deals for next year and at the moment “cannot calculate what their CBAM cost will be,” he said. But European importers are worried too, because once adopted the default emission values will apply for the next two years, the draft documents suggest. The CBAM regulation states that the default values “shall be revised periodically.” “It means that if they are wrong now … they will hurt certain EU producers for at least two years,” de Graaf said.

BERLIN — The leaders of German Chancellor Friedrich Merz’s conservative-led coalition on Friday announced accords on key issues that had divided his government in recent weeks. The internal disagreements — over pension reforms and a phaseout of the combustion engine — had turned into a test of the viability of Merz’s relatively weak and ideologically divergent coalition government. The new agreements, reached after a night of long negotiations, may have staved off a larger crisis of confidence in Merz’s government. Members of Merz’s coalition sought to portray the agreements as evidence that the government is functioning smoothly. “Sometimes the image that people paint — saying that everything is stuck and so on — doesn’t match what I experienced yesterday,” said Lars Klingbeil, the leader of the center-left Social Democratic Party (SPD), which governs in coalition with Merz’s conservative alliance. “We really did push forward far-reaching changes for this country in constructive debates.” The agreements announced Friday revolve around a pension package lawmakers are set to vote on in December that a faction of Merz’s own conservatives had railed against, as well as a deal on Germany’s position on the EU’s push to phase out the combustion engine. In the case of the pension reform, Merz sought to placate conservative rebels by vowing to take on a second, more far-reaching set of pension system reforms that would involve implementing the recommendations of an expert commission as early as next year. Previously, the coalition had agreed on a lengthier timeframe. “There is now a firm agreement,” Merz said in view of the immediate pension reform package set to go for a vote. “We will come to a decision next week, and it is not just a gut feeling, but a well-founded hope, based on the discussions we had this morning, that our colleagues now see that we are really serious about these reforms and that we are now going down this path together.” With regard to EU plans to ban carbon-emitting engines from 2035, Merz said he would write a letter to European Commission President Ursula von der Leyen on Friday to urge Brussels to apply extensive exemptions — including on dual-motor vehicles, plug-in hybrids, electric vehicles with range extenders and “highly efficient” combustion engines. That announcement signaled that the SPD has effectively backed off its previous support for EU green regulations for cars. “We ask the Commission, in a comprehensive sense, to adapt and correct the regulations for mobility,” said Merz. “This concerns in particular the compatibility of competitiveness — the industrial competitiveness of the European automotive industry — with the demands we place on climate protection.” Merz’s coalition has a majority of just 12 votes in the Bundestag, making his government vulnerable to even modest defections in the ranks. Conservative Bavarian premier Markus Söder on Friday signaled satisfaction with the agreements. “Everything we did yesterday is good for Germany, good for the economy, and bad for radicals,” he said in view of the surging far-right Alternative for Germany (AfD) party. “They are waiting outside the door for us to fail together. That is their great hope, that we will fail.”

BRUSSELS — The European Commission has unveiled a new plan to end the dominance of planet-heating fossil fuels in Europe’s economy — and replace them with trees. The so-called Bioeconomy Strategy, released Thursday, aims to replace fossil fuels in products like plastics, building materials, chemicals and fibers with organic materials that regrow, such as trees and crops. “The bioeconomy holds enormous opportunities for our society, economy and industry, for our farmers and foresters and small businesses and for our ecosystem,” EU environment chief Jessika Roswall said on Thursday, in front of a staged backdrop of bio-based products, including a bathtub made of wood composite and clothing from the H&M “Conscious” range. At the center of the strategy is carbon, the fundamental building block of a wide range of manufactured products, not just energy. Almost all plastic, for example, is made from carbon, and currently most of that carbon comes from oil and natural gas. But fossil fuels have two major drawbacks: they pollute the atmosphere with planet-warming CO2, and they are mostly imported from outside the EU, compromising the bloc’s strategic autonomy. The bioeconomy strategy aims to address both drawbacks by using locally produced or recycled carbon-rich biomass rather than imported fossil fuels. It proposes doing this by setting targets in relevant legislation, such as the EU’s packaging waste laws, helping bioeconomy startups access finance, harmonizing the regulatory regime and encouraging new biomass supply. The 23-page strategy is light on legislative or funding promises, mostly piggybacking on existing laws and funds. Still, it was hailed by industries that stand to gain from a bigger market for biological materials. “The forest industry welcomes the Commission’s growth-oriented approach for bioeconomy,” said Viveka Beckeman, director general of the Swedish Forest Industries Federation, stressing the need to “boost the use of biomass as a strategic resource that benefits not only green transition and our joint climate goals but the overall economic security.” HOW RENEWABLE IS IT? But environmentalists worry Brussels may be getting too chainsaw-happy. Trees don’t grow back at the drop of a hat and pressure on natural ecosystems is already unsustainably high. Scientific reports show that the amount of carbon stored in the EU’s forests and soils is decreasing, the bloc’s natural habitats are in poor condition and biodiversity is being lost at unprecedented rates. Protecting the bloc’s forests has also fallen out of fashion among EU lawmakers. The EU’s landmark anti-deforestation law is currently facing a second, year-long delay after a vote in the European Parliament this week. In October, the Parliament also voted to scrap a law to monitor the health of Europe’s forests to reduce paperwork. Environmentalists warn the bloc may simply not have enough biomass to meet the increasing demand. “Instead of setting a strategy that confronts Europe’s excessive demand for resources, the Commission clings to the illusion that we can simply replace our current consumption with bio-based inputs, overlooking the serious and immediate harm this will inflict on people and nature,” said Eva Bille, the European Environmental Bureau’s (EEB) circular economy head, in a statement. TOO WOOD TO BE TRUE Environmental groups want the Commission to prioritize the use of its biological resources in long-lasting products — like construction — rather than lower-value or short-lived uses, like single-use packaging or fuel. A first leak of the proposal, obtained by POLITICO, gave environmental groups hope. It celebrated new opportunities for sustainable bio-based materials while also warning that the “sources of primary biomass must be sustainable and the pressure on ecosystems must be considerably reduced” — to ensure those opportunities are taken up in the longer term. It also said the Commission would work on “disincentivising inefficient biomass combustion” and substituting it with other types of renewable energy. That rankled industry lobbies. Craig Winneker, communications director of ethanol lobby ePURE, complained that the document’s language “continues an unfortunate tradition in some quarters of the Commission of completely ignoring how sustainable biofuels are produced in Europe,” arguing that the energy is “actually a co-product along with food, feed, and biogenic CO2.” Now, those lines pledging to reduce environmental pressures and to disincentivize inefficient biomass combustion are gone. “Bioenergy continues to play a role in energy security, particularly where it uses residues, does not increase water and air pollution, and complements other renewables,” the final text reads. “This is a crucial omission, given that the EU’s unsustainable production and consumption are already massively overshooting ecological boundaries and putting people, nature and businesses at risk,” said the EEB. Delara Burkhardt, a member of the European Parliament with the center-left Socialists and Democrats, said it was “good that the strategy recognizes the need to source biomass sustainably,” but added the proposal did not address sufficiency. “Simply replacing fossil materials with bio-based ones at today’s levels of consumption risks increasing pressure on ecosystems. That shifts problems rather than solving them. We need to reduce overall resource use, not just switch inputs,” she said. Roswall declined to comment on the previous draft at Thursday’s press conference. “I think that we need to increase the resources that we have, and that is what this strategy is trying to do,” she said.

LONDON — The U.K. government is not moving fast enough to slash planet-destroying emissions from aviation, former Prime Minister Tony Blair has warned.  Governments in Westminster and elsewhere must step up progress in developing cleaner alternatives to traditional jet fuel, according to a report today from Blair’s think tank, seen by POLITICO.  “Aviation is and will continue to be one of the world’s most hard-to-abate sectors. Sustainable aviation fuel (SAF) mandates in Europe and the U.K. are ramping up, but the new fuels needed are not developing fast enough to sufficiently reduce airline emissions,” the Tony Blair Institute (TBI) said, referring to policies designed to force faster production of cleaner fuel.  The U.K. has made the rollout of SAF central to hitting climate targets while expanding airport capacity.  It is the third intervention on U.K. net-zero policy from the former prime minister this year.  Earlier this month, the TBI urged Energy Secretary Ed Miliband to drop his pursuit of a clean power system by 2030 and focus instead on reducing domestic bills. This followed a report in April claiming the government’s approach to net zero was “doomed to fail” — something which caused annoyance at the top of the government and “pissed off” Labour campaigners then door-knocking ahead of local elections.  Aviation contributed seven percent of the U.K.’s annual greenhouse gas emissions in 2022, equivalent to around 29.6 million tons of CO2. The Climate Change Committee estimates that will rise to 11 percent by the end of the decade and 16 percent by 2035.  SAFs can be produced from oil and feedstocks and blended with traditional fuels to reduce emissions. The U.K. government’s SAF mandate targets its use in 40 percent of jet fuels by 2040 — up from two percent in 2025.  Chancellor Rachel Reeves said in January that U.K. investment in SAF production will help ensure planned airport expansion at Heathrow —  announced as the government desperately pursues economic growth — does not break legally-binding limits on emissions.  The TBI urged Energy Secretary Ed Miliband to drop his pursuit of a clean power system by 2030 and focus instead on reducing domestic bills. | Wiktor Szymanowicz/Getty Images The TBI said that, while it expects efficiency gains and initial SAF usage will have an impact on emissions, a “large share of flights, both in Europe and globally, will continue to run on conventional kerosene.” A spokesperson for the Department for Transport said the government was “seeing encouraging early signs towards meeting the SAF mandate.” They added: “Not backing SAF is not an option. It is a core part of the global drive to decarbonise aviation. SAF is already being produced and supplied at scale in the U.K., and we recently allocated a further £63 million of funding to further grow domestic production.” The TBI said carbon dioxide removal plans should be integrated into both jet fuel sales and sustainable aviation fuel mandates, placing “the financial responsibility of removals at the feet of those most able to pay it.” 

BERLIN — Germany is facing crises from conscription to pensions, a troubled auto industry and faltering economic growth, and figuring out politically palatable solutions is splintering Chancellor Friedrich Merz’s coalition. “There have been too many public discussions that have been interpreted as disputes,” Merz pleaded last week of his fractious coalition of conservative Christian Democrats and center-left Social Democrats (SPD).   “The government must solve problems. And the government must not give the impression that it is divided,” Merz went on, “Then the confidence of the population in the political parties and also in the individuals involved will gradually grow again.”    With top politicians of the center left and center right feuding over key government policies, it’s affecting Germany’s place at the heart of the EU as other countries are having a hard time figuring out Berlin’s position on a host of key issues. There are also growing doubts over the coalition’s long-term survival prospects. Fewer than one-third of Germans think the coalition will be able to govern until the end of the legislative period in 2029, according to a survey by polling institute Insa for Bild, which also saw government approval fall to a record low of just 25 percent. At the same time, the far-right Alternative for Germany (AfD) has recently overtaken Merz’s conservatives as Germany’s most popular party, according to POLITICO’s Poll of Polls, and its rising strength is adding to coalition tensions. Since taking office in May, Merz’s Christian Democrats have tried to take the wind out of the sails of the anti-immigrant AfD by vowing to lead a crackdown on migration. But members of the SPD, Merz’s junior coalition partner, are increasingly trying to distance themselves from a discourse they say is taken straight out of the far-right playbook. The deputy leader of the SPD in parliament, Wiebke Esdar, went as far as joining anti-Merz protests over the weekend.   “The two major parties of the former center are now in a dilemma in that, on the one hand, they naturally have to distance themselves from each other to a certain extent, but at the same time they must always fear that, in a sense, if they do not work together properly, it will benefit the fringes,” said Florian Grotz, a political scientist at the Helmut Schmidt University in Hamburg.  KEY DIVISIONS A prime example of the coalition’s messy infighting is its battle over military conscription, a dispute over both the army’s future and how present it should be in Germany’s national identity.  The Bundeswehr needs to reach 260,000 troops by 2035 from about 180,000 today. The conservatives want to reintroduce a “lottery-based” draft if voluntary recruitment fails, invoking civic duty as the backbone of national resilience.   The SPD, backed by Defense Minister Boris Pistorius, counters that coercion will only breed inefficiency at a crucial time for Germany’s rearmament. Pistorius has already torpedoed a compromise between the two parliamentary groups, rejecting the reintroduction of mandatory elements.  The deputy leader of the SPD in parliament, Wiebke Esdar, went as far as joining anti-Merz protests over the weekend. | Kay Nietfeld/picture alliance via Getty Images Both sides agree that the army needs people — but not on how to rebuild a force gutted by decades of neglect. Critics warn that six-month stints for 18-year-old conscripts would barely scratch the surface of the Bundeswehr’s high-tech needs.  The issues have grown into a referendum on postwar Germany’s self-image and whether the country’s ability to implement wide-ranging reforms is equitable for everyone — young and old. While the SPD is trying to protect the young from a mandatory draft, a whole other generational issue has triggered a rebellion inside Merz’s own bloc: pension reform. At the center of it is SPD Labor Minister Bärbel Bas, who wants to lock in the current pension level of 48 percent of average wages beyond 2031. She argues that safeguard is essential to prevent benefit cuts when Germany’s baby boom generation retires later this decade.  For Germany, this is no small matter. Pensions are the country’s largest single item of public spending — more than defense, education or health — and the system rests on a delicate pact between workers and retirees. The coming years will see millions leaving the workforce while far fewer young people enter it, threatening to push the pay-as-you-go model to the brink.  But for a bloc of younger Christian Democratic lawmakers that looks like an act of generational theft. Bas’ reform means about “€115 billion in additional costs” by 2040, according to a position paper by the 18 lawmakers who say they want to block it, seen by POLITICO. The revolt has turned into a test of Merz’s authority. His government’s 12-seat parliamentary majority is among the smallest in postwar German history, meaning that a relatively small group of lawmakers can easily stymie any measure. THE END OF AN ERA  The coalition’s gridlock is also being felt in Brussels. The EU’s 2035 phaseout of combustion engines — a crucial issue for Germany’s car industry that anchors nearly a fifth of the country’s exports — is another dicey issue that exposes Germany’s fading grip on Europe’s industrial transition.  Merz’s Christian Democratic Union and the SPD have tentatively backed a compromise to keep the EU’s 2035 ban in principle while creating exemptions for plug-in hybrids, “range-extender” vehicles that use small combustion engines to add range to batteries, and some synthetic fuels.   But the Bavarian Christian Social Union, the sister party of Merz’s CDU, has flatly refused. Bavarian premier Markus Söder has framed the ban as an assault on Germany’s industrial soul, warning Brussels to turn back its “ideological regulations.” Söder’s strong rejection is based on the influence of car giants such as BMW and Audi in Bavaria, but also on political fear, two people familiar with the CSU’s strategic thinking, granted anonymity to discuss internal matters, told POLITICO’s Berlin Playbook. Bavarian premier Markus Söder has framed the ban as an assault on Germany’s industrial soul. | Boris Roessler/picture alliance via Getty Images Söder worries about ceding working-class voters to the far-right AfD, they said, which has turned the defense of the combustion engine into a rallying cry ahead of next year’s communal elections.   The European Commission will start reviewing its car-emission regulation by the end of the year and expects member countries to communicate their positions beforehand. While other big countries such as France and Spain are trying to uphold the ban, Germany is essentially voiceless as long as the government has no common position. Defining a new approach toward pressing questions — including on the way forward for the German car industry —has become even more important as the old global system that saw Germany become Europe’s dominant economy looks increasingly tattered. During the long 2005-2021 rule of former Chancellor Angela Merkel, Germany’s prosperity rested on three pillars: exports to China, cheap gas from Russia and U.S. protection through NATO. They have all crumbled, shattered by Chinese market barriers, Moscow’s full-scale invasion of Ukraine,and President Donald Trump’s questioning of U.S. security guarantees for Europe. “Germany has created and enjoyed relatively favorable conditions during the Merkel era — economically, geopolitically, etc., and little provision has been made for the future,” said Grotz, the political science professor. “That is why difficulties exist now not only in one area, but in many.”  The result is a country forced to reinvent itself — but the fear of fringe parties is keeping mainstream politicians frozen, said Sabine Kropp, a political science professor at the Freie Universität Berlin. “A truly poor approach at the moment is the constant fear of the AfD,” she said. `”Everything is viewed through the lens of whether it benefits or harms the AfD, and that reduces the ability to solve problems.” Laura Hülsemann and Rasmus Buchsteiner contributed to this report. 

BRUSSELS — The EU is considering allowing its heavy industry to pollute for longer under a new draft proposal aimed at breaking the deadlock on the bloc’s 2040 goal for cutting planet-warming emissions. Under pressure to strike a deal before the COP30 climate summit starting Nov. 10 in Brazil, Denmark, which is steering the talks among EU countries, is opening the door to slowing the EU’s climate efforts. The intention is to win support from the majority of countries to back the target of an 90 percent emissions cut by 2040 compared to 1990 levels. The text, obtained by POLITICO, proposes that the EU assess progress toward achieving the new 2040 climate goal every two years, taking into account “scientific evidence, technological advances and evolving challenges to and opportunities for the EU’s global competitiveness.” The European Commission could then suggest legislative changes, the document adds, meaning Brussels could adjust — and potentially weaken — its target in future. The suggestion comes after EU leaders discussed competitiveness and climate policy at a summit last week and pitched ideas to unlock the stalemate in the negotiations. A number of leaders called on the EU to set pragmatic climate goals and introduce more flexibilities to reach them, something that is now reflected in the new compromise document. But allowing the EU to decelerate its climate efforts could see it miss the 2040 goal, or force it to rely on other instruments to reach it, such as outsourcing more emissions cuts to poorer countries. OFFERING FLEXIBILITIES The Danish presidency proposes to introduce measures to avoid penalizing one sector (such as heavily polluting industries) if other sectors (e.g. forestry, which contributes to sequestering carbon in forests) can’t meet their emissions reduction or absorption targets. The proposal states that “possible shortfalls in one sector would not be at the expense of other economic sectors, notably industrial sectors under the EU [Emissions Trading System].” The document does not propose changing the headline 90 percent emissions cut target as proposed by the Commission in July. But it does raise the possibility of changing how much international carbon offsets — an instrument that allows the EU to outsource emissions cuts abroad — should contribute to achieving the target. The Commission proposed capping their use at 3 percent starting in 2036, but member countries including France and Poland have suggested 5 percent or 10 percent. It’s expected to be a key topic in negotiations this week and next, according to one EU diplomat. The document also states that the bloc’s climate goals should not be pursued at the expense of the EU’s military priorities. When designing new climate legislation, the Commission should take into account “the need to ensure the Union’s and its Member States’ capacity to rapidly increase and strengthen their defensive capacity by addressing possible burdens while maintaining incentives for industrial decarbonisation,” the document reads. The compromise text will now be discussed by EU country envoys on Wednesday and Friday with the aim of allowing environment ministers to strike a deal Nov. 4.