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EU Green Deal Push(back)

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The EU established the Green Deal in 2019; its flagship strategy to transition to climate neutrality by 2050. This triggered a wave of EU legislation to align EU law with 2030 and 2050 emissions targets. However, recent signs of EU climate policy wavering and regulatory pushback have left many confused on progress. Investors and corporates often ask us for clarity on this complex and often opaque legislative process. So where is Europe up to? Is there pushback and what comes next?

This note provides clarity on the status of all Green Deal legislation. We assess all 74 pieces of Green Deal legislation (Directives and Regulations). After a surge of legislative activity in the final weeks of 2023, in our view, nearly all policies that are critical to achieving Green Deal objectives (60 of 74) are now provisionally agreed or adopted. We examine the crucial legislative activity over recent weeks, explaining major obstacles and contentions. While some laws were watered down to reach agreement, there is no evidence of a slowdown in EU climate policymaking.

In 2024, attention will need to shift to rapid implementation of Green Deal legislation by Member States; an assessment shows that the EU is not on track to achieve its 2030 emissions goals. In our view, there are several issues to watch that will have a significant impact on cost-effective implementation at the macro level and corporate risks and opportunities at the micro level. The outcome of June’s European Parliament election could be crucial: a shift to the right could see less urgency on climate action and the key reforms needed for successful implementation in Member States; including expanded carbon pricing, scaling public and private finance and clean investment, and better policy co-ordination.

Investors should, in our view, probe affected sectors and companies to ensure they are properly assessing the risks and opportunities from the implementation of Green Deal laws across EU Member States.

Figure 1: Status of European Green Deal legislation

Status of European Green Deal legislation
Source: HSBC based on European Parliament and European Council

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