The European Commission proposed an amendment to the EU Climate Law on 2 July, setting a legally binding target to cut net greenhouse gas emissions by 90% by 2040, compared with 1990 levels. The draft law includes limited flexibility—allowing up to 3% of the target to be met through international carbon credits and permanent carbon removals—acknowledging both technological constraints and economic realities. The proposal is now under review by the European Parliament and Council, with the aim of formalising the EU’s updated nationally determined contribution (NDC) ahead of COP30 in November.

However, on 8 July, the far-right Patriots for Europe (PfE) group unexpectedly secured the rapporteurship—the lead negotiating role—for the European Parliament’s Environment Committee on the proposed 2040 target. As rapporteur, PfE now leads the drafting of the Parliament’s position and will negotiate with member states—an influential role for a group openly hostile to ambitious climate policy. In response, the Greens, Socialists and Renew Europe tabled an urgent motion to bypass the rapporteur and fast-track the vote. That effort failed on 9 July, when the centre-right sided with the far right, handing the Parliament’s climate stance to its most climate-critical bloc.

German industry sounds the alarm

A day after the Commission’s proposal, on 3 July, major German industrial employers and the Industrial Union of Mining, Chemicals and Energy issued a stark warning to Chancellor Friedrich Merz. In an open letter, they described Germany as facing its worst economic crisis since World War 2, citing the loss of more than 100,000 industrial jobs in the past year. The signatories criticised the government’s promised “green economic miracle” as illusory, arguing that energy-intensive industries are under existential threat.

German industry likened the country’s energy transition to a botched open-heart surgery and accused the government of undermining energy security despite decades of subsidies for renewables.

The group called for a comprehensive “Industrial and Economic Agenda 2030” to safeguard over a million jobs and restore Germany’s economic competitiveness. “We do not want subsidies like feudal lords,” the letter read, “but reasonable framework conditions to ensure that good work and value creation have a future again in Germany.” It likened the country’s energy transition to a botched open-heart surgery and accused the government of undermining energy security despite decades of subsidies for renewables. The phase-out of nuclear and coal, the letter argued, has left Germany reliant on intermittent renewables and costly gas imports—resulting in Europe’s highest power prices and increased energy insecurity.

Among the letter’s core demands were:

• An industrial electricity price cap of €50 ($58)/MWh, excluding political CO2 costs
• A moratorium on new climate pledges at national and EU level
• A stronger carbon border adjustment mechanism (CBAM) to defend exports and prevent circumvention
• A revised hydrogen strategy aligned with industrial use
• Immediate legal clarity and state-backed risk coverage for carbon capture, utilisation and storage (CCU/S)
• An end to “aimless” wind and solar expansion
• A halt to further power plant closures and a reset of energy policy
  
  

Germany’s average wholesale power price in 2024 was €78.5/MWh, including €21.3/MWh in carbon costs—well above the EU average CO2 cost of €15.7/MWh. Meeting the proposed €50/MWh benchmark would be economically implausible without either deep structural reforms or large-scale subsidies. The sentiment echoes what Polish policymakers have long warned: that abandoning coal without viable baseload alternatives risks causing long-term “greenflation” and structural energy insecurity.

A 'big beautiful' energy deal?

At a summit in Scotland on 27 July, US President Donald Trump and European Commission President Ursula von der Leyen agreed to a transatlantic trade framework that could have lasting implications for EU energy strategy. Under the deal, the US will impose a 15% tariff on most EU goods, while the EU has pledged $600b in investment in the US during Trump’s current term. Brussels also committed to buying $750b worth of US energy over three years—framed as a measure to cut dependence on Russian supplies and support energy diversification.

Trump has successfully forced a shift in the EU energy policy—from pursuing costly green ambitions to accommodating US energy dominance.

In 2024, US crude exports reached a record 4.1m b/d, with Europe taking in 1.9m b/d following the EU’s 2022 ban on Russian seaborne crude. At $70/bl, this volume equates to roughly $40b annually, or $120b over three years.

US LNG shipments to the EU totalled 49bcm (36mt) in 2024, sold at an average TTF price of $10.89/mBtu for around $18b. Replacing the remaining 53bcm of Russian gas would add approximately $20b/yr, from 2028, once the full gas ban takes effect. The maximum three-year LNG bill could reach $74b.

EU imports of US metallurgical coal in 2024 were valued at $2.7b, potentially totalling $8b over three years. Nuclear fuel imports exist but contribute marginally to the total.

Altogether, foreseeable US energy exports to the EU over three years could reach about $202b. To meet the headline $750b commitment, the Commission may encourage European energy buyers to sign long-term US LNG contracts and book the full multi-decade value upfront. Bridging the $548b gap would require around 55mt/yr of new 20-year deals—precisely the kind of carbon lock-in von der Leyen had pledged to avoid under the 2020 Green Deal.

Trump has successfully forced a shift in the EU energy policy—from pursuing costly green ambitions to accommodating US energy dominance. With the US expected to overtake Russia as the world’s largest gas exporter this year, Trump appears set on consolidating this position.

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Author: Thierry Bros