EU Leaders Agree Truce Paving Way Toward Ambitious Climate Goals

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(Bloomberg) — European Union leaders paved the way for a deal on ambitious new climate targets by agreeing to support key industries and cut red tape during the green transition.

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In one of the most divisive issues at the European Council in Brussels, leaders agreed on a raft of “enabling conditions” to help the automakers and other embattled industries, particularly those that are energy-intensive, according to a council spokesperson. They also signaled that green rules would be less restrictive to ease the path to climate neutrality by 2050.

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The agreement increases the likelihood that climate ministers will be able to sign off on a goal to cut net emissions by 2040 at a Nov. 4 meeting, which requires a qualified majority of member states. The aim is to also agree on a climate pledge to send to the United Nations in time for the COP30 climate summit in Brazil, which starts less than a week later.

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Still, any deal is likely only to provide short-term relief. Member states still need to negotiate with the European Parliament on the final shape of the 2040 climate goal. And then the EU will need to find agreements on the laws needed to get there, governing everything from the insulation of homes to the energy mix.

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Before the end of the year, the European Commission, the bloc’s executive branch, is expected to come forward with changes to its law that will effectively ban the combustion engine in new cars from 2035. The automotive sector is struggling to keep pace with China in the transition to electric vehicles and jobs throughout the supply chain have been lost as a result.

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The breakthrough late on Thursday comes after months of bickering between countries on the level of climate ambition and whether the transition is compatible with the needs of heavy industry. Denmark, which holds the EU’s rotating presidency, had hoped to reach a deal on the 2040 goal last month, but France and Germany pushed for national leaders to decide.

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In the run-up to the EU summit, each country presented its own laundry list of demands to support further climate action, whether on trade protections, more regulatory flexibility or changes to a controversial new carbon market, known as ETS2, that will cover emissions from heating and road transport.

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Commission President Ursula von der Leyen assured leaders earlier this week that she would work to take all those concerns into account, something which helped shore up support for the deal on Thursday.

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