Welcome to Better Europe’s weekly update on EU Affairs.
PLEASE DO NO SIGNIFICANT HARM WITH MY TAX SPENDING
The EU has spent years lecturing the private sector and its member states about the holy principle of Do No Significant Harm (DNSH) – it’s not sustainable to do something good while harming another sustainability objective. Like building a hydropower energy plant that requires some deforestation to build an artificial lake powering the plant. So, the EU’s bible of sustainable finance, the Taxonomy Regulation, tells banks, investors, and companies how to measure the “alignment” of their investments with the EU’s environmental goals. Yet when it comes to the EU’s own budget, the DNSH commandment suddenly becomes optional. The EPP now wants to remove these environmental safeguards from the next EU’s multi-year budget, due to apply as of 2028. The hypocrisy is striking — at least the progressive part of the Parliament acts in line with its values: how can the EU demand climate-proof investments from businesses and national governments, while accepting that taxpayer money is spent on infrastructure, agriculture, or energy projects that ignore the same standards?
INTERNAL COMBUSTION ENGINE CARS ARE HERE TO STAY
Cars are important for the EPP. German cars are important for the German EPP. And jobs are important for the German S&D. That, in a nutshell, is why the European car industry is once again holding the EU hostage. Ok, it creates millions of jobs, can be a driver of innovation, and it is still part of Europe’s economic competitiveness. The sector argues that if Brussels races ahead with its emissions restrictions and the already watered down ban on the Internal Combustion Engine, ultimately Das Auto will be priced out of the market. So, the alternative proposal is: no phase-out of the combustion engine at all. The German government has also been vocal: push too hard, too fast, and the EV transition could hand the future of mobility to China and the US, while European workers pay the price. French and Italian manufacturers, already struggling with global competition, warn that overregulation without adequate support or investment risks hollowing out an industry that employs over 13 million people across the EU. Sorry for those who invested in charging infrastructure or electric vehicle production!
HEAT WAVE? JUST RELAX BY THE POOL IN YOUR GARDEN
The recent twin heatwaves should have been a wake-up call for anyone who still believes climate change has no financially material impact on the EU’s economy. Outdoor workers sweating or sent home early, schools closed with even final exams postponed until after the summer break in some cases, and no supporters at the Tour de France because healthcare services are overwhelmed with heat stress victims. Sounds like a script from 6-7 years ago, right? But instead, we seem to be stuck in a culture war over air conditioning, with the French far right proposing to swap EV subsidies for free air con – as if there is no point in slowing down climate change anymore, and we should aim instead for full-blown adaptation. In finance, things are not much better. NGO Finance Watch explains how financial institutions are blind to the risks of chronic extreme weather, treating heatwaves, droughts, and floods, treating them as hiccups rather than the new normal. But insurers are hiking premiums in the hottest regions, mortgage lenders are refusing to finance houses in flooding zones, and businesses are facing increased costs from climate-related disruptions. The next systemic crisis might not come from subprime mortgages, but from subprime climate resilience. As one right-wing Belgian federal minister put it: “two days of heat, and we’re all going to die again”. Relax, and have a Stella at the garden pool. What do you mean, you don’t have a garden?