In recent years, the EU has positioned itself as a global leader in climate policy, with ambitious plans to achieve climate neutrality by 2050. However, the surge of populist far-right movements in recent elections across the EU member states poses significant challenges to the bloc’s green ambitions. This political shift threatens to dilute and delay essential climate policies, creating a precarious future for the EU’s environmental goals.

The rise of populist movements, characterised by their anti-green platforms, is fundamentally reshaping the political landscape in Europe. Voters, particularly from rural areas, are increasingly blaming the rise in living costs on the expensive energy transition, calling for a shift from stringent emission reduction targets to greater competitiveness and security. This sentiment has forced even centrist parties to reconsider and sometimes retract their support for green policies.

For example, in Germany, the Free Democratic Party (FDP), led by Finance Minister Christian Lindner, withdrew support for the phase-out of coal-fired power by 2030, citing the need for affordable energy. Similarly, in Italy, the right-wing government under Georgia Meloni has backtracked on several energy transition commitments. Even traditionally green-leading countries like Finland have seen their newly-elected government reduce taxes intended to cut carbon emissions.

The rise of populist movements, characterised by their anti-green platforms, is fundamentally reshaping the political landscape in Europe.

Economic pressures
The EU’s climate agenda, driven by policies such as the Green Deal, Fit for 55 and REPowerEU, aims to reduce greenhouse gas (GHG) emissions and phase out fossil fuels. However, the economic realities following the energy crisis of 2022 have prompted a re-evaluation of these ambitious goals. The crisis, exacerbated by Russia’s invasion of Ukraine, led to skyrocketing energy prices and underscored Europe’s dependence on cheap Russian gas.

Despite efforts to phase out Russian gas by 2027, imports have continued due to economic pressures. The opening of a new gas route through Turkey and the discount pricing of Russian gas have made it difficult for EU countries to completely sever ties with Russian energy supplies. This dependency poses a significant challenge to the EU’s green transition.

Market dynamics
The EU’s ambitious renewable energy targets, including a significant increase in wind and solar capacities, are heavily dependent on market conditions and the cost of clean technologies. While there has been substantial growth in renewable energy capacity, high equipment costs and market volatility continue to pose challenges. For instance, Norway-based Statkraft has downsized its plans for wind and solar capacity expansion due to unfavourable market conditions.

Moreover, the deployment of green hydrogen, a key component of the EU’s decarbonisation strategy, remains economically challenging (or possibly unfeasible) compared to grey hydrogen produced from fossil fuels. The production costs for green hydrogen are projected to stay high, making widespread adoption unlikely in the near term.

Changing political landscape
The political shift towards populism is influencing legislative processes at both national and EU levels. The upcoming months will see several critical events, including Hungary’s presidency of the Council, the US presidential elections, and the expiration of the Ukraine-Russia gas transit agreement. These events will significantly shape the EU’s climate policies.

Under the leadership of far-right Prime Minister Viktor Orbán, Hungary may prioritise national interests over EU-wide climate goals, potentially slowing down the implementation of green policies. Similarly, the rise of populist parties in France, Germany, Italy and other member states could lead to greater resistance to the EU’s climate agenda.

The energy crisis severely impacted Europe’s industrial competitiveness, forcing many companies to relocate or reduce operations. The petrochemical sector, in particular, saw a significant number of firms move to regions with cheaper energy costs, such as the US and China. This trend highlights the critical need for the EU to provide a stable and affordable energy supply to retain its industrial base.

The Antwerp Declaration also emphasises the importance of expanding grid infrastructure, promoting green gases and ensuring regulatory harmonisation across member states. It underscores the need for the EU’s electricity output to multiply and energy costs to fall sharply to maintain global competitiveness.

An uneven playing field
The EU’s Green Deal Industrial Plan (GDIP), adopted in 2023, aims to redirect around €250bn from existing funds to fast-track the transition to green energy and a digital economy. The GDIP positions itself as a response to the US Inflation Reduction Act (IRA) and China’s 1+N policies, which create the framework for multi-billion investments in industrial decarbonisation.

However, implementing the GDIP faces challenges due to the complex regulatory framework across the EU’s 27 member states. Member states have various taxation regimes and different energy visions, with some seeking to fast-track the energy transition while others are more averse to change. The disparity in policies and regulatory environments across the EU creates an uneven playing field, complicating the implementation of a unified industrial strategy. Despite these challenges, the GDIP aims to enhance industrial competitiveness by providing regulatory support, streamlining processes, and promoting the deployment of renewable energy and green technologies.

Renewable energy ambitions
The EU’s renewable energy ambitions are central to its climate policy. The revised Renewable Energy Directive, adopted in 2023, raises the binding renewable energy target for 2030 to at least 42.5%, with an aspiration to reach 45%. This ambitious target builds on the previous goal of 32%, reflecting the EU’s commitment to accelerating its clean energy transition. The REPowerEU plan, introduced in 2022, emphasises the need to rapidly reduce dependence on Russian fossil fuels and increase renewable energy production across the EU.

To support these goals, the European Commission has adopted several measures, including speeding up permitting procedures for renewable projects and facilitating power purchase agreements. The Directive also sets sector-specific targets for renewables in heating, cooling, transport, industry and buildings. These measures are designed to create a more integrated and resilient energy system supporting the EU’s long-term climate goals.

Moreover, the European Green Deal prioritises building interconnected energy systems and better-integrated grids to support renewable energy sources. It promotes innovative technologies, modern infrastructure and energy efficiency to reduce GHG emissions and enhance the quality of life for EU citizens. The plan also aims to decarbonise the gas sector and promote renewable fuels, including hydrogen, in sectors where electrification is yet to be feasible.

The EU’s renewable energy ambitions are a critical component of its strategy to achieve climate neutrality by 2050. However, realising these goals will depend on the political will of member states, the economic feasibility of clean technologies, and the ability to overcome regulatory and market challenges.

Future outlook 
Despite the challenges, the EU’s ambition to achieve climate neutrality by 2050 remains on the political agenda. The speed and effectiveness of policy implementation, however, will depend on several key factors:

• Costs of clean technologies: Renewable energy and green hydrogen deployment must become more economically viable. This requires technological advancements, reductions in production costs, and stable market conditions.
• Global gas market dynamics: The EU’s reliance on gas imports and the potential increase in global LNG production could influence energy policies. Cheap and abundant gas supplies might delay the transition to greener energy sources.
• Industrial base and competitiveness: Europe must enhance its industrial competitiveness by ensuring access to low-cost, reliable energy. This includes expanding grid infrastructure, promoting green gases and streamlining regulations.
• Political dynamics: The political climate within the EU and globally will play a crucial role. The influence of populist movements, the actions of the US administration after the election, and the stability of international alliances will all impact the EU’s ability to implement its green policies.

Challenging times
While the EU’s commitment to climate neutrality is unwavering, the path to achieving this goal is fraught with challenges posed by the rise of populist movements and the economic realities of the energy transition. The EU must navigate these complexities carefully, balancing the need for environmental sustainability with economic competitiveness and energy security.

As we look to the future, the success of the EU’s green ambitions will depend on a concerted effort to address these challenges through innovative policies, international cooperation and a steadfast commitment to sustainability.

• Further reading: ‘European electricity market overhaul underway’. The UK and European energy retail markets have been rocked by events post-COVID and the war in Ukraine, which have all taken their toll. The energy markets are at a crossroads, with strategic reviews underway nationally and internationally.
• European consumers will be better protected against supply and price risks following the European Union’s adoption of a revised electricity market design and the decarbonised gas and hydrogen package.