Green Deal Team: Keeping the EU on track for climate neutrality in 2050?

On 17 September European Commission President Ursula von der Leyen presented the 27 candidates for the next European Commission: “Leyen II” – which will be in charge from 2024 until 2029. The Energy Commissioner, the Climate Commissioner and the Vice President for the Clean Transition are the key positions for Europe’s energy policy. The individual candidates will now be quizzed by the European Parliament after which the European Parliament and the Council will have to approve the 27 European Commissioners and its President as a whole.

On 18 July 2024 the European Parliament confirmed Ursula von der Leyen as President of the European Commission in a secret ballot: she received 401 votes in favour. This will be her second term as Commission President (Leyen II), after having been first elected by the European Parliament in July 2019 (Leyen I). In the morning of the same day von der Leyen had published her 31-pages long Political Guidelines for the legislative period lasting from 2024 until 2029. Energy and climate policy will be at the core of her main initiative, the so-called “Clean Industrial Deal” driving decarbonisation and industrial growth.

Political Guidelines 2024 – 2029

In her Political Guidelines for the years 2024 until 2029 Ursula von der Leyen describes the main elements of the Clean Industrial Deal. Starting from the assumption that the EU has successfully reduced its emissions while growing its economy, the Guidelines reiterate the intention to stay on track with climate neutrality by 2050 as set out in the European Green Deal. To this end the European Commission will focus on implementing the existing legal framework for 2030: for the energy business this is mainly about implementing the Fit-for-55-package. The challenge consists in the fact that most of the approximately twenty elements of the Fit-for-55-package need to be backed up by implementing legislation, which still needs to be written and adopted. E.g. the revised EU Emission Trading System (EU ETS) requires a whole set of Implementing Acts in order to be applicable. Furthermore, the various elements of the Fit-for-55 package include revision clauses which will trigger more legislative work at a stage, where the implementation is not yet achieved.

Clean Industrial Deal

The core element of Leyen II according to the Political Guidelines is the so-called new Clean Industrial Deal for competitive industries and quality jobs; it will be published during the first 100 days of the new European Commission’s term of office. This could be in February 2025 at the earliest. The Clean Industrial Deal is supposed to focus on creating the right conditions for companies to reach the EU’s climate goals, e.g. by simplifying, investing and ensuring access to cheap, sustainable and secure energy supplies and raw materials. Around the same time the European Commission will publish a proposal for a 90% emission-reduction target for 2040 to be enshrined in the existing EU Climate Law.

To protect the EU’s remaining industrial base, the Clean Industrial Deal will include a legislative proposal for a so-called Industrial Decarbonisation Accelerator Act financially supporting industries and companies through the energy & climate transition. The Act is supposed to channel investment in infrastructure and industry, in particular for energy intensive sectors and support lead markets for the development, production and diffusion of clean tech across the EU’s industry. It is also supposed to speed up planning, tendering and permitting processes.

Cheap energy for companies and households

To bring energy prices further down, the Political Guidelines also foresee (another) reform of the EU’s energy market. Ursula von der Leyen has not forgotten her claim made in the European Parliament in spring 2022 in the middle of the energy price crisis, where she claimed that market design must be adapted: according to the Political Guidelines consumers are not yet benefitting from the lower production costs of clean energy. Apart from a revised market design the EU should also move further away from fossil fuels and develop a new governance needed for a true Energy Union. Furthermore, investment in clean energy infrastructure and technologies will be promoted. This will include renewables and low-carbon technologies, grid infrastructure, storage capacity and transport infrastructure for captured CO2. The EU will also invest in energy-efficiency measures, the digitalisation of the energy system and the deployment of a hydrogen network, according to the Political Guidelines. Another recuring idea is the use the EU’s market power to secure supplies by extending the existing demand aggregation mechanisms (e.g. AggregateEU for natural gas) to hydrogen and critical raw materials. With view to the critical raw materials needed for the clean energy technologies, a new Clean Trade and Investment Partnerships is supposed to help secure the supply of raw materials, clean energy and clean tech from across the world. According to the Political Guidelines reaching climate neutrality by 2050 will require a wide range of innovative technologies, including technology for mobility. Referring to the 2035 climate neutrality target for cars, the Political Guidelines propose a technology-neutral approach, in which e-fuels have a role to play. This shall be achieved via a targeted amendment of the existing legislation.

Draghi report on EU competitiveness

On 9 September 2024 the former ECB-President Mario Draghi published his long-awaited report on the EU’s competitiveness. The report was written in cooperation with a wide range of experts and the European Commission services. The report raises concerns about the future economic developments of the EU and compares the faltering competitiveness of the EU with the higher dynamics of the US economy. Whilst the report is not legally binding and has no formal status, it will serve a s menu for the incoming European Commission from which to pick when justifying legislative proposals.

The report has several significant implications for the EU’s energy policy: the major theme of the Draghi-report is the urgent need to lower energy prices in the EU, which have risen sharply due to external shocks like the war in Ukraine and the move away from Russian gas. The report emphasizes that high energy costs are undermining Europe's competitiveness, particularly in energy-intensive industries, and are leading to a loss in GDP growth. The report suggests that reducing energy prices is crucial to revitalizing European industry.

Furthermore, the report calls for a massive deployment of clean energy sources with low marginal generation costs, such as renewables and nuclear power. This is seen as vital for making energy more affordable while reducing the EU’s dependence on imported fossil fuels. The report strongly advocates for the widespread use of power purchase agreements (PPAs) and bilateral Contracts for Difference (CfDs) to provide price stability for renewable energy projects. These long-term contracts are considered essential to reduce volatility in energy pricing and encourage investment in renewable infrastructure. Unfortunately, the report echoes to ideas included in von der Leyen’s Political Guidelines, according to which there is a need for reforms of the EU’s electricity market design to decouple electricity prices from the price of fossil fuel prices and in particular natural gas.

Regarding energy trading the report emphasizes the importance of energy trading rules that support market transparency and efficiency. It recognizes the role of energy trading platforms but also points out that financial speculation and high transaction costs are contributing to inflated energy prices. The Draghi Report calls for reforms to address these inefficiencies. The report includes a call for more stringent regulations on energy trading and even a requirement that energy traders be located in the EU (NB: the wording is not very specific).

European Commission candidates for 2024 – 2029

On 17 September, the European Commission published the organigram with all the names and job titles of the 27 European Commissioners and the respective job descriptions, the so-called “Mission letters” for every Commission candidate.

Green Deal Team

Three Commissioners will be particularly important for the EU’s energy and climate policy:

1. Dan Jørgensen (DK, S&D) – Commissioner for Energy and Housing

Dan Jørgensen is the current Danish Minister for Development Cooperation and Global Climate Policy. He will be responsible for overseeing EU’s energy policy, with a particular focus on reforming the electricity market and integrating renewable energy into the grid. Another priority, according to his mission letter, is the electrification of the European energy industry and putting an end to Russian energy imports.

2. Wopke Hoekstra (NL, EPP) – Commissioner for Climate, Net-Zero, and Clean Growth

Wopke Hoekstra is the current EU Commissioner for Climate Action. He will have to focus on achieving the EU’s net-zero targets and manage the decarbonization of key sectors, including energy. According to this Mission Letter his priorities will include the promotion of the technologies that drive the transition to climate neutrality.

3. Teresa Ribera Rodríguez (ES, S&D) – Executive Vice-President for Clean, Just, and Competitive Transition 

Teresa Ribera is the current Spanish Minister for the Ecological Transition. She will supervise the work of Jørgensen and Hoekstra. Her main tasks include the acceleration of the EU's green energy transition, ensuring that renewable energy growth is both environmentally and economically sustainable. Furthermore, she will ensure that the EU meets its 2050 climate neutrality targets, as outlined in the EU Green Deal and the Fit-for-55 package. And she will have to find the right balance between the push for renewables whilst protecting European industries from rising energy costs and market volatility. On top of all of that she will also be in charge of Competition (DG COMP) and Competivity. According to her Mission Letter, her priorities are grid modernization, especially investment in energy storage and smart grid technologies, to accommodate the rise of renewable energy, ensuring a socially just transition, protecting workers and regions heavily dependent on fossil fuels.

Way forward

Ursula von der Leyen second nomination was part of a broader package agreed upon by EU leaders, which also included the nominations of Antonio Costa (PT, S&D) as President of the European Council and Kaja Kallas (EE, RenewEurope) as the EU’s High Representative for Foreign Affairs.

The next step for the Leyen II-Commission are the hearings in the European Parliament, which will take place at the end of October at the earliest: Each Commissioner-designate is subject to a public hearing before the European Parliament. These hearings involve questioning the candidates about their qualifications, policy positions, and fitness for their respective portfolios. Parliamentary committees specific to each candidate's policy area conduct these hearings, which can result in approval, rejection, or requests for changes to the portfolio assignment. In the case of the Green Deal “Dream” Team the relevant Committees are the Energy Committee (ITRE) and the Environment Committee (ENVI).

After the hearings, the European Parliament votes on the entire College of Commissioners, likely in October or November. This vote requires a simple majority to confirm the entire team. If the Parliament approves the new Commission, it moves on to the next stage. If there are major issues, it can request changes, usually affecting individual Commissioner candidates. Once the European Parliament gives its consent, the European Council formally appoints the new Commission by qualified majority voting. The new Commission then takes office and begins its five-year mandate, starting in November 2024 – at the earliest.

More Information:

Mission letters of the Commissioner candidates (17 September 2024)

Draghi-Report (9 September 2024)