European elections 2024 serve as a litmus test for energy policy

RP Perspective
Jun 4, 2024, 08:39 AM

Will the EU Green Deal and its ambition continue within the next term, or will a (partial) revision take place?

By: Sumin Nam, Director & Head of Energy with Rud Pedersen Public Affairs Germany

The upcoming European Elections are creating some uncertainties around energy policy, with a substantial rollback of measures (concerning Green Deal/fit-for-55) having the potential to be excluded due to three reasons: (1) Majorities needed to reverse regulation will be slim, (2) a lot of the regulation is currently already implemented on national level and (3) the EU procedural statutes call for certain continuity.

However, case-to-case changes still can occur and might affect files that are of specific German interest:
1. The Energy Tax Directive has not yet been formally adopted and hence is one of the few files left of the Green Deal agenda. The main content, to account for GHG-emission intensity amongst different fuel type taxes, is considered a driver in the decarbonisation of (notably) the transport sector – a sector Germany notoriously fails to reach the emission targets in. A delay, change or revision remains on the table after the council did not reach an agreement in the past years.
2. The ETS II, planned to go into full force in 2027, will set a certificate price for the transport and building sector. It cannot be ruled out that a new EU COM will touch the system given the price increase and hence high burden on EU citizens. Germany, who has already earlier established a national (fixed) price system for these sectors, will watch closely how, and if, the system transmission will play out.

The calls of the (not least vocal German) industry will weigh in on the next commission’s agenda – and an “industrial deal” could hence follow that mitigates costs, reduces red tape, and ideally does not revert, but instead compliments, its green predecessor. Still, new regulation in the energy space is needed – from the EU’s 2040 emission reduction target to the potential integration of carbon removal into the emission trading system. Whatever the outcome, German, national policymakers and industrial actors will be alert.