It was inevitable that Mark Carney would be the star of Ursula von der Leyen’s State of the Union address. Her embrace of the Canadian prime minister, seated in the Strasbourg chamber, and her announcement that she intends to pave the way for Canada to become the EU’s first associate member country demonstrated that Europe is starting to get serious: it is acknowledging a radical shift in its relationship with Washington and is beginning to play a full-court game. Starting with the building of solid alliances with reliable countries and a more balanced network of trade relations on a global scale.
The most sensitive front, however, is the domestic one. The Commission President sounded the alarm, pointing out that ultra-nationalists and Euroskeptics are aiming to break up the Union. She spoke of forces that “want to shatter our European unity and despise our values,” calling for an operational plan to counter hybrid threats. She also pointed to the economic crisis fueled by the energy crisis as the fuel driving populism.
Between these two poles lies a third element—one that has taken a back seat in commentators’ analyses but deserves attention: on environmental issues, von der Leyen has not yielded to pressure from the right, which is calling for an end to the Green Deal. The president described the summer that just ended as the “summer of truth,” noting that wildfires, droughts, and heat waves spared almost no part of the continent.
On this basis, he reiterated the most politically sensitive point: Europe can and must pursue its climate goals, while acknowledging the complexity of the transition. Hence the announcement of concrete adaptation measures: a new framework for climate resilience that will map the 100 most vulnerable regions, a Climate Insurance Alliance, a European Heatwave Plan, a new water initiative, and a proposal for a European firefighting fleet.
On the energy front—which is closely linked to climate issues— the Commission aims to double the share of electricity in total energy consumption by 2040, with the goal of reducing spending on fossil fuel imports by 260 billion euros per year.
After all, just on the eve of the Commission President’s speech, the plenary session in Strasbourg decided to maintain—albeit with some refinements—the framework of the European carbon price, which is one of the main tools for curbing greenhouse gas emissions. Essentially, the EU has confirmed the two systems it uses to price CO2. The first applies to industry and power plants (ETS1). For every metric ton of greenhouse gases, companies must purchase a “pollution permit,” but the accumulated permits are currently keeping the price low, hence the automatic cancellation mechanism for permits exceeding 400 million. The Commission had proposed suspending this automatic cancellation of excess allowances, leaving them in the reserve; the Parliament rejected the proposal and decided to maintain the cancellation, while raising the threshold that triggers it from 400 million to 650 million, effective February 1, 2027. In essence, Strasbourg is keeping the mechanism that eliminates excess allowances in place to prevent the price of carbon from collapsing, but with a wider margin than before.
The second system (ETS2) applies the same principle to heating fuels and automotive fuels: this time, the cost is likely to be passed directly on to households and drivers in the form of higher utility bills and gas prices, which is why the agreement just reached with the Council introduces safeguards to cushion the sharpest price hikes.
In addition, the Carbon Border Adjustment Mechanism—the levy that requires importers of carbon-intensive goods to pay the same price for emissions as European producers—has been expanded: it now also covers processed steel and aluminum products, with stricter controls to prevent companies from circumventing the rules. To protect the most vulnerable sectors, a decarbonization fund is also being established, set to launch in 2027.
Therefore, climate action for Europe remains a priority. What still needs to be addressed is the connection between economic, environmental, and social goals. If environmental goals are conceived and proposed in isolation, without taking social repercussions into account, the path for the rise of populism will remain clear. On the other hand, a Europe that overhauls its production system in light of new climate security requirements and, through this effort, recovers the jobs lost due to the global phase-out of the fossil fuel economy would be a more popular Europe—not a more populist one.
