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.

The energy landscape is always evolving, and another challenge is rapidly coming into view: data. The rise of artificial intelligence (AI), cloud computing and machine learning is driving unprecedented demand for electricity. This trend is only set to accelerate as the UK seeks to establish itself as a global leader in AI. The UK government has rightly committed to being an ‘AI maker, not taker’. But that ambition comes with consequences. According to the National Grid’s Future Energy Scenarios 2024, data centers could become one of the UK’s fastest-growing sources of demand by the 2030s. AI data centers are used to train the most advanced AI, including frontier models such as ChatGPT, and require vast amounts of energy due to their continuous utilization. We cannot meet this surge in demand simply by layering data center load on top of an already stretched energy system. COORDINATION WILL BE CRITICAL Last month, a report from Aurora Energy Research highlighted that an uncoordinated approach to power sourcing could see power sector emissions increasing by 14 percent, which would directly undermine the UK’s decarbonization goals and drive up wholesale electricity prices. > Without change, we risk slowing down both the deployment of AI infrastructure > and our energy transition. Instead, we need a coordinated way to unlock the potential of the AI sector. The current approach, where most data centers cluster around areas like London and the Thames Valley, driven by proximity to demand, is unsustainable. These regions are often far from large-scale sources of generation and already face grid constraints such as network connection bottlenecks. Different thinking is viable for data centers geared toward AI workloads, which are less sensitive to latency — the delay of data transfer — and therefore do not need to be sited close to major cities. Without change, we risk slowing down both the deployment of AI infrastructure and our energy transition. To help mitigate this risk, we should align our energy and digital strategies more closely. That starts with a national framework to strategically site new data centers in areas with available grid capacity, preferably close to power generation sources. Drax Power Station could be one of those locations. via Drax CO-LOCATING DATA CENTRES AND POWER GENERATION In 2024 Drax Power Station was the UK’s single largest source of renewable power by output. Our site in Selby, North Yorkshire, provides approximately 2.6 GW of dispatchable power capacity, enough power for five million homes. Unlike intermittent renewables, Drax generates power whether or not the wind is blowing or the sun is shining. But the site’s potential reaches beyond what it delivers today. We already benefit from planning consents, which — alongside the right policy support and regulatory framework — could allow us to transform Drax into the world’s largest engineered carbon removals facility by installing bioenergy with carbon capture and storage (BECCS) on two of our generating units. BECCS is unique. It is the only technology that can simultaneously generate renewable power and remove carbon dioxide from the atmosphere. And, significantly, co-locating a data center with the power station could help enable the delivery of this world leading technology. > Building data centers next to power stations brings multiple advantages. It > enhances system resilience and reduces the risk of plant curtailment. It > minimizes energy lost in transmission, something that becomes more pronounced > the further electricity has to travel. Large power stations like Drax Power Station were designed to support industrial-scale generation. They have substantial grid connections, large surrounding estates and access to cooling water. These attributes make Drax Power Station uniquely suited for the possibility of hosting a hyperscale data center. Building data centers next to power stations brings multiple advantages. It enhances system resilience and reduces the risk of plant curtailment. It minimizes energy lost in transmission, something that becomes more pronounced the further electricity has to travel. It also supports the connection of new energy capacity by relieving congestion on the grid queue. Unlocking this potential, however, will require a rethink of current regulations. SEIZING THE OPPORTUNITY At present, power stations are restricted from supplying electricity simultaneously to both the grid and a private off-taker such as a data center. These rules were written for a different era, one that did not anticipate intense energy consumers such as AI clusters emerging as a major player in the energy ecosystem. By unpicking these constraints, we can free up untapped capacity, provide flexible solutions for energy security and support the digital infrastructure needed to drive economic growth. The government’s recent announcement of AI Growth Zones is a welcome step. If designed properly, this initiative could be the catalyst for a strategic rollout of AI infrastructure across the UK. Rather than clustering growth in already congested urban areas, Growth Zones can enable us to locate data centers where power is plentiful, where local communities stand to benefit from investment and where the grid can accommodate growth. This is about more than just plugging in servers. It’s about creating a coherent and forward-looking strategy that links where we generate power to where we use it — and recognizes that AI and energy are now inextricably linked. Subject to clear government policy support and milestones, combining BECCS with a large-scale data center at Drax Power Station could align with this industrial strategy. Together, these developments could create the option for a globally unique proposition: a carbon negative data center — delivering world-leading innovation for the UK and directly countering the perspective that AI growth will mean more carbon emissions.   These projects could protect and create thousands of high-quality jobs in a region that has historically powered the UK but that now faces the risk of deindustrialization as a result of declining heavy industry. A joined-up plan for energy and digital growth can offer lasting economic resilience to communities that need it the most. > It’s time to think smarter about how we build, power and place the critical > infrastructure of the 21st century. At Drax, we are ready to be part of that future. We are already a leading renewable energy generator in the UK and we have the infrastructure and ambition to implement a cutting-edge data center solution at Drax Power Station, helping the country secure its place as a digital leader while keeping the lights on. It’s time to think smarter about how we build, power and place the critical infrastructure of the 21st century. We must ensure new data capacity is integrated in ways that enhance grid stability without compromising the transition to clean energy or negatively affecting the needs and rights of local communities. With the right strategy, the UK doesn’t have to choose between energy security and digital growth. We can achieve both.

BRUSSELS — The European Commission will permit countries to outsource a portion of their climate efforts to poorer countries from 2036, according to a draft proposal obtained by POLITICO. The EU executive plans to present the bloc’s 2040 emissions-reduction target on Wednesday after several months of delay. The goal will be set at 90 percent below 1990 levels, the draft amendment to the European Climate Law shows.  But as POLITICO reported in mid-June, the Commission intends to meet up to 3 percentage points of the new target with international carbon credits, despite fierce criticism from its own scientific advisers. This plan aligns with Germany’s position on the 2040 goal.  Such credits will allow the EU to pay for emissions-slashing projects in other, usually poorer countries, and count the resulting greenhouse gas reductions toward its own 2040 target, rather than the climate goals of the country hosting the project. The draft proposal envisages using them only in the second half of the decade. “Starting from 2036, a possible limited contribution towards the 2040 target of high-quality international credits under Article 6 of the Paris Agreement” — global rules governing carbon credits — “of no more than 3% of 1990 EU net emissions,” the draft states. The Commission aims to propose legislation regulating such credits at an unspecified date, the draft adds. “Their specific role and deployment would need to be based on a thorough impact assessment and subject to the development of Union law setting robust and high integrity criteria and standards, and conditions on origin, timing and use of such credits.” Critics, including the bloc’s scientific advisers, warn that relying even just in part on international credits risks slowing the EU’s climate efforts at home. The EU’s existing 2030 and 2050 targets must be met solely through domestic measures. But the proposal specifically excludes the possibility of integrating credits in the EU’s carbon market, an option that some experts feared could tank the bloc’s CO2 price, which is meant to incentivize companies to reduce their emissions. “These international credits should not play a role for compliance in the EU carbon market,” the draft reads.  Carbon credits are only one of 18 “elements” — effectively, promises to make the target more palatable to skeptical governments — that the Commission plans to integrate into the EU’s post-2030 climate policy framework, according to the draft, which is dated June 27. French President Emmanuel Macron joined Poland and Hungary in demanding delays. | Pool Photo by Benoit Tessier via EPA Others include opening the bloc’s carbon market to permanent CO2 removals — for example through capturing carbon directly from the air, a method as yet unavailable at scale — as well as “enhanced flexibility across sectors.” The remaining promises to EU countries are considerably more vague, with the Commission vowing to pay attention to everything from scientific advice and social impacts to cost-effectiveness and economic competitiveness in its policy framework for 2040. The 2040 target has been met with significant pushback from governments, with many sending Brussels long lists of conditions for supporting the goal. Last week, French President Emmanuel Macron joined Poland and Hungary in demanding delays. The Commission in its draft proposal insists that “a 90% target puts the EU on the pathway which provides the greatest overall benefits in terms of competitiveness, resilience, independence, autonomy, a just transition and ensuring that the EU meets its commitments under the Paris Agreement.”

BRUSSELS — Germany’s incoming government will throw its weight behind an ambitious EU climate target for 2040, but only if the European Commission allows countries to offset a portion of their planet-warming emissions instead of slashing them. The stance was revealed Wednesday in a coalition agreement between the center-right Christian Democrats (CDU), which won February’s snap election, and the center-left Social Democrats (SPD). The SPD’s 300,000-plus members must still approve the 144-page deal.  In the agreement, the two parties recommit to Germany’s 2045 climate neutrality target and give contingent backing to the EU executive’s recommended 90 percent emissions-cutting goal for 2040. Brussels has delayed legislation to enshrine the new target after struggling to find sufficient support from governments and lawmakers. Yet Berlin’s support comes with the radical condition that EU countries must be allowed to incorporate international carbon credits in their climate efforts — meaning that instead of reducing pollution at home, they could pay for emissions cuts in non-EU countries and count those toward their own climate balance.  Despite some enhanced global governance rules, the reliability of such credits varies wildly. Critics warn that relying on offsets would discourage much-needed emissions cuts and shift rich countries’ responsibility to developing nations. Last month, POLITICO reported that the European Commission has held talks with lawmakers and governments on including international credits in the EU-wide goal. The revelation caused significant disquiet among green-minded European Parliament members and environmental groups. The German government deal, if approved, will add the weight of Europe’s largest economy to the push for the credits to be included. Speaking before the coalition deal was released, Tiemo Wölken, a German SPD MEP, said using such credits would “undermine the credibility of our climate policies and unduly shift responsibility onto other nations. This would open up tremendous loopholes instead of enabling emissions reductions at home.” The coalition deal stipulates that any credits should be certified and of high quality, lead to permanent emissions reduction and be limited to “maximum 3 percentage points of the 2040 target.” In addition, the coalition makes its 90 percent support contingent on being allowed to count permanent carbon removals toward the target. And the deal says Germany’s contribution to the EU-wide target must be limited to its existing domestic 2040 target — 88 percent. Both carbon removals and international carbon credits should be integrated into the Emissions Trading System, the EU’s cap-and-trade carbon market, as well as the bloc’s overarching Climate Law, the parties say.  Peter Liese, a prominent CDU MEP, described the agreement’s language as a good compromise.  “If the largest [EU] member state finds a clear position, it will help us find compromise within the EU as well,” he said. Last month, POLITICO reported that the European Commission has held talks with lawmakers and governments on including international credits in the EU-wide goal. | Sean Gallup/Getty Images Beyond the climate targets, the coalition agreement backs the EU’s upcoming carbon price on fossil fuels used for heating and transport in 2027, with the parties vowing to redistribute the revenues to households and companies. The agreement’s energy policy sections are largely unchanged from a March draft, with the new government planning 20 gigawatts of additional gas power plant capacity while pushing ahead with the expansion of renewable energy. The parties also say they “want to make use of the potential of conventional gas production in Germany.” Nuclear power is not mentioned at all in the document, despite the Christian Democrats’ repeated campaign promises to revive Germany’s atomic energy capacity.  The new clean heating law, which sparked a massive backlash, will be “abolished” and replaced with a revised version, according to the agreement. The law, introduced by the outgoing government, would ban the use of fossil fuels in heating from 2045 — a step the International Energy Agency recently lauded as a significant “achievement.”  The CDU has sought to scrap the law, while the SPD — which helped pass the legislation as part of the outgoing government — wanted only targeted revisions, according to March’s draft document.  CORRECTION: The article was updated to correct the coalition’s plans for the clean heating law. It will be abolished.

BRUSSELS — What a difference a year makes.  When Wopke Hoekstra faced the European Parliament in October last year, lawmakers made him sweat, delaying his approval by several days.  Back then, they had huge doubts as to whether this fiscal hardliner and ex-Shell employee with little experience in climate policy was the right person to replace socialist Green Deal chief Frans Timmermans — especially at a time when Hoekstra’s political family, the center-right European People’s Party (EPP), was seeking to weaken green legislation.  Fast-forward 12 months, and lawmakers needed less than an hour to give Hoekstra their stamp of approval to continue as the European Union’s climate commissioner. Even before the hearing, MEPs hinted they were already preparing to give him a passing grade.  The rapid approval is proof that Hoekstra has managed to strike a careful balance between defending the EU’s climate ambitions and assuaging concerns about energy costs and industrial decline. If Thursday’s hearing was any guide, he’ll need to keep on walking that tightrope in the five years to come.  Below, POLITICO takes you through the five key things to know about Hoekstra’s hearing.  1. NO BACKTRACKING, PERIOD  There was a real threat of climate backsliding following this summer’s EU election, which pushed the European Parliament to the right. Seizing on farmer protests and industry warnings, conservatives argued for less stringent green legislation.  Not with me, Hoekstra told MEPs on Thursday. His main message, much to the relief of Greens and center-left lawmakers, was that there would be no backtracking on existing climate targets and measures. Industry needs predictability, he argued.  That meant sticking to his commitment to a 90 percent emissions-cutting target for 2040. He also pledged not to dilute policies such as putting a carbon price on heating and transport fuels or phasing out fossil-fuel cars — conceding only to discussing tweaks during already-agreed revisions.  And while Hoekstra promised to slash unnecessary bureaucracy, he stressed this would not mean weakening climate rules.  2. VAGUE ON FUTURE LEGISLATION  “We cannot wait” to act on climate change, Hoekstra told MEPs during his opening remarks.  Yet concrete plans for that action apparently can wait. However clear the Dutch commissioner was on preserving existing climate targets, he remained vague on the path forward. Even on his favorite topic — carbon markets — he was fuzzy on his vision. | Olivier Hoslet/EFE via EPA Hoekstra said he would craft legislation to ensure the EU can achieve its 2040 target, but gave no details on what that might entail. He eschewed specifics on sectoral measures, energy targets and the much-anticipated Clean Industrial Deal. And while emphasizing the importance of a socially fair transition, he mostly pointed to an existing measure — the new Social Climate Fund, widely considered insufficient — as the solution.  Even on his favorite topic — carbon markets — he was fuzzy on his vision, dodging demands for more clarity on whether and how carbon removals should be integrated into the EU’s market, known as the Emissions Trading System.  He did offer a tiny bit more when pressed on how he would prepare the EU for climate change consequences. “If legislation is needed for that, I’ll make sure we push that,” Hoekstra said, adding: “It would need to include money from member states” as well as from the EU budget.  3. TAX WEALTH, TECH GIANTS AND FOSSIL FUELS  The headline tax news from the hearing was that Hoekstra — whose portfolio also includes taxation — backs EU levies on tech giants if returning U.S. President Donald Trump drops out of a global deal to tax multinational firms.  Hoekstra’s openness came as a surprise, given that Brussels had previously dismissed speculation about going it alone. Trump’s win might have changed that logic — Hoekstra said his preferred option is finding a common line with the U.S., but that the EU should act unilaterally if that’s not possible. Overall, the Dutchman quelled concerns from the Socialists and Greens by committing to taxing the rich and big polluters, including the aviation sector, and to cracking down on shell companies.  While criticizing him for not setting a deadline to phase out fossil-fuel subsidies, Austrian Greens lawmaker Lena Schilling, a climate activist-turned-MEP, lauded his “ambition” on taxation. “It is promising that he wants to use taxes to move away from oil and gas, address social inequality, and make the rich contribute,” she said.  4. A NEW APPROACH TO CLIMATE FINANCE?  With his confirmation secured, Hoekstra jets off to Azerbaijan next week to attend this year’s United Nations climate conference, known as COP29. In Baku, participants will have to settle on a deal to finance climate action in developing countries.  The EU is the top provider of climate finance, and is facing calls to step up its support and leadership given the imminent return of Trump, who has pledged to quit the Paris Agreement once again.  When asked about his plan for global climate action, and for financing in particular, Hoekstra spoke of “carrots and sticks.” Curiously, he said the EU should double down on measures such as its carbon border tax — which has raised diplomatic tensions at climate talks — to reduce emissions worldwide: “We take measures, and we insist others follow.”  He also suggested that developing countries owe the EU more in return for funding. “If you look at all the money we’re spending in the Global South, I think it’s fair that we have a conversation … All the money we’re spending, what’s the natural quid pro quo? In terms of fairness, in terms of alignment, in terms of democracy and rule of law, in terms of climate action?”  Asked about this comment as he exited the hearing chambers, Hoekstra said he had been speaking in broad terms and simply wanted a more “holistic conversation” with developing countries on potential common interests “in terms of safety and security, climate and advancing democracy.”  5. NOT-SO-GREAT EXPECTATIONS  So did Hoekstra simply prove the haters wrong over the past year?  He did win hearts and minds among lawmakers. But his swift approval is also a testament to the low expectations for raising climate ambitions in this more conservative European Parliament.  Last year, left-leaning lawmakers effectively forced Hoekstra to commit to a 90 percent emissions-reduction target for 2040 during his hearing — months before Brussels would publish its recommendation.  This time, few MEPs pressed for details, and none demanded specific commitments. But maintaining ambiguity is likely what helped Hoekstra win the approval of Greens, Socialist, liberal, center-right and conservative lawmakers.  “It’s impossible to be more specific and satisfy two-thirds of the Parliament,” said Spanish Socialist MEP Javi López.  Many green-minded lawmakers simply seemed relieved that there would be no backsliding on the 2030 climate targets after the June election. Hoekstra’s vision, López said, “is more ambitious than the current balance of power in Parliament.”  Federica di Sario and Hanne Cokelaere contributed reporting.