EU election’s shift to right signals Green Industrial Deal validation [Advocacy Lab Content]

2 months ago 14

For industries that work with raw materials, the EU Parliament’s shift to the right is being interpreted as a signal from voters that they want more attention paid to the economy.

The 2024 EU elections have come and gone, and the result has been a shift to the right for the European Parliament. While parties on the left side of the political spectrum lost seats, parties on the right gained seats – with the centre-right European Peoples Party (EPP) coming first.

For European industries who have seen a record amount of EU legislation passed over the past five years in the context of the Green Deal, the result indicates that voters’ priorities have changed.

“This year, the economic situation and insecurity were the driving forces, and that’s a major difference to 2019 when we saw climate change playing a critical role,” says Mark Mistry, public policy manager at the Nickel Institute.

“In 2019, parties on the left and the Greens benefitted from citizens being concerned about environmental issues. So, it seems we have right now a situation where economics is playing a more relevant role.”

Green Industrial Deal

Even before election day, it had become clear over the past months that EU priorities were changing. The European Commission started talking about a new phase of the climate plan called the “Green Industrial Deal”.

In February the Commission and the Belgian presidency of the Council of the EU convened an industry summit in Antwerp which presented the Antwerp Declaration for a European Industrial Deal, calling on the EU to “put the Industrial Deal at the core of the new European Strategic Agenda for 2024-2029”.

The declaration presented by Commission President Ursula von der Leyen, was signed by 527 companies and 171 industry associations and unions. It contains a ten-point plan for changing the Green Deal including calling for an “Omnibus proposal to take corrective measures on all relevant existing EU regulation” that should be the first piece of legislation in a second von der Leyen term.

For raw materials sectors and the industries dependent on them, this has left a lot of questions over how this will be translated into action over the coming term. With the EU increasingly focusing on the green and digital transitions, the policies shaped by the new Commission and Parliament will play a crucial role in determining the future landscape of raw materials sourcing, processing, and usage.

Intersection of policies

Along with climate concerns, worries about the security of supply chains brought about by Russia’s invasion of Ukraine have also been a driving force behind legislation over the past two years. The election results suggest a continuation or even intensification of policies to reduce dependency on external suppliers, particularly from regions with unstable political climates or differing environmental standards.

This could lead to increased funding and support for domestic mining projects within the EU and investments in recycling and secondary raw materials processing to create a more resilient supply chain.

“In this context, it will be interesting to see what happens to the Green Deal and whether it will be carried forward as was initially planned five years ago, or whether we’ll see that the new Commission is going to address some of the concerns,” says Mistry.

“What we noted in the Green Deal was that the Commission tried to make the impossible possible – to create a win-win situation between environmental issues and economics. But what became more visible over time is that we’re not operating in isolation in Europe. We’re competing on a global scale. So, we hope that the outcome of the elections will see a strengthening of the industrial economic agenda.”

Driver for growth

Mistry says the Green Deal has been in many ways a driver of growth, particularly for the nickel sector which is crucial in providing the raw materials to make electric vehicles. New electrification and transport emissions targets have driven up the production of zero-emission vehicles by European car companies.

The new Circular Economy Strategy has also unlocked new potential for an increased emphasis on recycling and reusing nickel from end-of-life products like batteries and electronics. Policies encouraging or mandating the use of recycled materials could lead to a surge in the secondary nickel market, affecting supply and demand dynamics.

But Mistry would like the next term to focus more on Europe’s industrial needs and realize that sometimes it just isn’t possible to have total win-win situations between climate efforts and global competitiveness.

“It’s not that the environmental agenda should be completely dropped,” he says. “But in the past Commission, there was this attempt to accommodate both – to be best performers when it comes to the environment but on the other side to ensure companies remain competitive and benefit from the Green Deal. But what we have seen is that’s not possible in a local context because there’s no [global] level playing field.”

Green investment, sustainable finance

Though much of the Green Deal’s implementing legislation, passed through the Fit for 55 package, has already been passed into law and is now being transposed by national governments, there are still several unresolved aspects that the industry will be watching closely.

For instance, the taxonomy setting that can be considered a green investment still needs to be settled. “When you look into the criteria that are defined to identify companies within sectors that can have access to sustainable finance, these criteria in the past were extremely ambitious,” says Mistry.

“So even for European producers, often enough the threshold was set so only 10% of the best performers could benefit. So many of these criteria still have to be drafted and discussed.”

Much will become clearer once national governments have nominated commissioners to serve in a second von der Leyen term, and those commissioners have been approved by the European Parliament after confirmation hearings in the Autumn.

The EU will remain in a between-term legislative pause until the end of the year, but in December it is expected that the full priorities of the new term will be spelled out. The new Commission and Parliament might enhance support mechanisms for industries vital to the green transition, including those involved in the nickel supply chain.

Financial incentives for sustainable mining practices, research into alternative nickel sources, and the development of new technologies could be on the horizon. Companies in the nickel sector will need to adapt to these evolving policies, investing in cleaner technologies and sustainable practices to thrive in this new landscape.

[By Dave Keating I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]