Preparing for industry shifts and climate goals amid political change in the EU and Germany

Key programmes include the Competitiveness Act, Competitiveness Fund, and Clean Industrial Deal, with a new flagship strategy building on the Green Deal and a revision of CO2 emission standards planned for 2026. The Commission emphasises the importance of stable CO2 standards for long-term investment predictability and plans a targeted amendment to include e-fuels. The EPP (European People’s Party) urges revising the ICE (Internal Combustion Engine) ban from 2035 to include exemptions for alternative fuels and introduce a carbon-correction factor.

The ETS Directive revision in 2026 will discuss introducing waste management into the EU ETS starting in 2028, integrating carbon removals, and adding international flights from January 2027. The Energy Taxation Directive aims to streamline energy taxation with climate targets to boost competitiveness and accelerate industrial decarbonisation. Objectives include simplifying administrative processes, developing lead markets, and mobilising private funding, with initiatives like the Affordable Energy Action Plan, Industrial Decarbonisation Accelerator Act, Chemical Industry Package, and Industrial Action Plan for the automotive sector. The 2040 climate target aims for a 90% GHG emission reduction, with a proposal to revise the European Climate Law by the end of 2025 to enshrine this target and develop a post-2030 climate policy framework.

Balancing climate goals with economic priorities

While Ursula von der Leyen and the Commission emphasise their commitment towards the climate goals of the European Green Deal, the prevailing topics in the upcoming federal elections in Germany are playing along the same lines, focusing on improving framework conditions to boost the industry and, hence, Germany's largely export-dependent economy.

Although sustainability and green policies are still on the agenda, especially for the Green Party, the conservative parties have announced a more balanced approach, which focuses on economic growth and securing the competitiveness of the German industry, targeting energy price reductions and investments in green technology and infrastructure.

With significant progress in expanding renewables by the outgoing administration, the new government faces a staggering economy that could challenge the acceptance of climate policies. The German industry’s demands towards a new government point in the same direction: reduction of bureaucracy, stable and affordable energy, trade policies to protect German businesses from unfair competition, and labour market reforms to address the scarcity of skilled workers.

Guiding industries through regulatory complexity

Germany, like other Member States, is implementing already approved EU legislation, but will likely miss some deadlines. Although the EU is looking into developing and simplifying legislation to promote competitiveness and growth, it has become increasingly complex to understand which legislation is implemented and which opportunities and challenges might affect the business of industrial players.

AFRY Management Consulting is uniquely positioned to help the industry understand and master these challenges. With our deep expertise in regulatory frameworks, market trends, strategic planning, and operational excellence, we assist companies in developing robust strategies that secure their businesses and achieve climate targets. Our client-centric approach helps companies adapt to new regulations, optimise their competitiveness, and leverage opportunities in a demanding market landscape.

Let AFRY guide you through these uncertainties and help you thrive in a competitive and sustainable future.