2035, 2040: Enquiry into the Missing European Climate Targets

In her State of the European Union (SOTEU) address, European Commission President Ursula von der Leyen reaffirmed her commitment to the European Green Deal, casting it as the defining legacy of her first mandate. Although climate was far from central in the speech, she reinstated that "The science is crystal clear," drawing a direct line between environmental policy, industrial competitiveness, and Europe’s security.

Yet barely 48 hours later, that clarity dissolved. The Danish presidency of the Council of the EU announced that the union’s 2040 emissions target would be decided by the European Council, handing countries like Hungary and Poland - long time climate policy obstructionists - a potential veto over the EU’s climate ambitions. This abrupt shift was the product of an opaque and unsettling bout of political maneuvering - a drama that reveals, rather than resolves, the deep fractures at the heart of Europe’s economic governance.

At the very moment Europe should be charting a decisive course for industrial decarbonization, its climate agenda is under siege. Three flagship policies are facing backlash - at the worst possible moment.

Ten years after the Paris Agreement, the EU will arrive weakened at COP30, handing the advantage to China. Europe’s new Nationally Determined Contribution (NDC), due in September, was meant to provide a clear trajectory to net zero by 2050, anchored in the Commission’s proposed 2040 emissions target. Instead, the target has been steadily eroded by political opposition since its release this summer, leaving Europe vulnerable to delay and dilution.

The uncertainty extends beyond climate diplomacy to Europe’s industrial transformation. The 2035 ban on new combustion engine sales - hailed as a cornerstone of the EU’s green transition when adopted in 2023 - is now under review, with public consultations underway ahead of a decision in 2026. Industry groups and several member states are pushing for a "more pragmatic" approach, a euphemism for weakening the ban. 

The real question is not whether to roll back the ban on combustion engines in 2035 - or the climate targets for 2040 - but rather whether Europe is capable of supporting the transformation of its industries. This could either take the form of strict rules - bans, carbon pricing, the European "stick" approach - or of massive, broad-based support for breakthrough innovation and scaling-up, in line with the Chinese strategy. To reverse the European strategy without putting forward an alternative would, in effect, be tantamount to renouncing any strategy at all. 

Behind the Scenes of Europe’s non-Strategy

Initially, momentum built for swift adoption of the 2040 target. But under pressure from France, Italy, Poland, Hungary, Slovakia, and Austria, the Danish presidency reversed course, deferring the decision to the European Council. This move hands each head of state a de facto veto and injects high-stakes geopolitics into what should have been a technical climate negotiation.

The European Commission had proposed a 90% emissions cut by 2040, compared to 1990 levels, with a narrow 3% flexibility through international carbon credits (ICCs) under Article 6 of the Paris Agreement.

But divisions quickly surfaced. France initially pushed for a 7% flexibility, seeking greater leeway to use ICCs, particularly for sectors facing high abatement costs. Poland went further still, advocating for international carbon trading to be embedded directly into the EU ETS itself - a move that would blunt the pressure on its domestic industries as free allocations under ETS1 are phased out.

The result is a bizarre alliance of conflicting interests: climate leaders wary of losing credibility, major economies like France seeking room to maneuver, and laggards like Poland intent on slowing the transition. The risk is clear: if this dynamic plays out in the European Council, Europe’s 2040 climate ambition could be watered down beyond recognition - or blocked entirely.

In a scenario where Poland’s proposal for 10% flexibility on the 1990 baseline is adopted, the EU would, by 2040, finance abroad the same volume of emission reductions as the amount it is still allowed to emit domestically under a -90% pathway. This would come at a high economic and tactical cost for member states, which would need to fund decarbonization projects overseas to comply with their targets and avoid potential legal challenges.

By 2050, the EU must reach net zero, meaning that all remaining domestic emissions will have to be eliminated regardless. Flexibility thus risks delaying action while increasing total costs, as Europe pays once to decarbonize overseas and then again to decarbonize at home.

From Paris to Belem, Driving Away from Europe’s Climate Goals ?

With COP30 approaching in November, the EU faces a crucial deadline: the submission of its Nationally Determined Contribution (NDC) - its formal pledge under the Paris Agreement. In a note prepared for EU Council ambassadors, the Danish presidency suggested a 2035 emissions target range of 66.3% to 72.5% below 1990 levels.

This framing is revealing. A 66.3% cut, based on a linear path between 2030 and 2050, would leave the EU off-track for net zero, while the higher figure, 72.5%, was Copenhagen's original proposal. By separating the 2035 target from the 2040 decision, member states have created space for a weakened - and potentially delayed - commitment, undermining the EU’s credibility just as COP30 begins.

The timing could not be worse. With only 28 countries having submitted updated NDCs, the multilateral climate regime is already fragile, especially following the aggressive U.S. withdrawal from global climate diplomacy. If both the EU and China arrive with weak pledges, COP30 risks collapsing into irrelevance. In this vacuum, even a modest Chinese NDC would be applauded simply for existing - despite falling well short of Beijing’s own 2060 carbon neutrality target, let alone the Paris-aligned 2050 benchmark.

2035 ICE-Ban: Past Glory or Future Bet?

This loss of direction is starkly visible in the fight over the 2035 ban on internal combustion engine (ICE) sales, a policy now under direct attack in Brussels. Transport accounts for one-third of EU emissions, 70% of which comes from cars and trucks. Worse, emissions from this sector have risen since 1990, making it Europe’s biggest climate failure.

When adopted in 2023, the ICE ban has become the prime target of bad political pushback and lack of strategic foresights. This debate is not just about cars - it is a proxy battle over Europe’s industrial future, particularly in technologies that are going to be instrumental for future growth such as batteries.

On one side, defenders of the status quo seek to protect legacy technologies where Europe has long been dominant. On the other, proponents of electrification push for massive investment in batteries and clean mobility, an area where China is years ahead. Even European automakers are split: some cling to "technological neutrality," hoping that synthetic e-fuels might someday prolong the life of combustion engines, while others bet decisively on electrification - but too often in the most short-sighted way possible: relying on cheap Chinese batteries to power European cars, with little thought given to building domestic supply chains or securing technological sovereignty.

This divide captures Europe’s broader dilemma: cling to the past, or commit fully to the industries of the future. So far, Europe has tried to do both - and in doing so, risks losing both battles.

Climate Targets or Political Games ?

Designed to strengthen Europe’s climate ambitions, the 2040 target has instead exposed the EU’s deep divisions. In the European Parliament, fault lines run both along party lines and national interests. Right-wing MEPs have called for scrapping the 2040 proposal altogether, while Social Democrats argue it should be tightened by removing flexibilities. The EPP is caught in the middle, torn between climate "pragmatism" and mounting electoral pressure from its right flank - though united in its defense of the internal combustion engine.

France, meanwhile, illustrates the institutional and political turmoil gripping parts of the EU. While the French government and key industrial players publicly support ambitious targets - for both emissions reduction and transport - the Élysée has advanced a different line. Macron is gambling on so-called "enabling conditions": demands for greater recognition of nuclear power, additional support for heavy industry, looser land-use rules, and a revised burden-sharing framework. France has, in fact, already secured significant concessions. Nuclear power has been redefined in multiple EU texts, opening the door to preferential treatment and even new streams of financing.

Crucially, the 2040 target and the 2035 ICE ban are difficult to separate. Weakening car regulations would make it mathematically impossible to hit the 2040 milestone, while delaying the 2040 decision undermines the credibility of the 2035 ban. Fragmentation between member states and industries risks turning these two flagship policies into mere bargaining chips, with profound consequences - not only for Europe’s climate trajectory and global leadership, but for the future of its industrial economy.

Is a Coherent Strategy Still Possible for Europe?

At the crossroads of climate ambition and industrial anxiety, the debate over the 2040 target and the revision of the combustion engine ban reflects a deeper reckoning about Europe’s environmental and economic future. Confronted by Trump’s aggressive protectionism and China’s rapid advance in cheap cleantech, the EU has been forced to rethink its green agenda.

Under the von der Leyen II Commission, competitiveness has become the central buzzword - a promise to align economic growth with the green transition. But competitiveness must be understood not as a slogan, or as an excuse for delay, but as a forward-looking strategy: a decisive transformation that positions Europe for lasting prosperity in a decarbonized world.

Defending the status quo is not a neutral choice - it is economically self-destructive. Europe’s industries already face energy costs two to three times higher than their competitors in China or the United States, while operating within a strict rules-based trade system and with far fewer fiscal tools to shield them from global shocks. In this context, Europe cannot simply imitate the United States or China. It must chart its own course - one rooted in its unique strengths - and move decisively to seize its remaining first-mover advantages before they vanish.

Strong European leadership also empowers national governments and the Commission to double down on support policies, designing a coherent industrial strategy built around "competitive sustainability."

Totemizing climate ambitions as a blockroad for competitiveness is misleading. The crisis in Germany’s auto industry, for instance, goes far beyond the 2035 ICE ban. German carmakers are losing ground in the Chinese market and face rising tariffs in the United States. A successful shift to zero-emission vehicles is not an environmental concession - it is a prerequisite for survival in the global market. In a forthcoming note, the Institut Montaigne insists on the necessity of affordable alternatives - ideally made in Europe - for measures of this kind to be accepted and embraced by consumers. Otherwise, the current backlash will intensify. In this context, clarity matters more than "flexibility." Customers and manufacturers alike need a clear signal to retool and invest.

On the consumer's side, a forthcoming note from Institut Montaigne recommends maintaining support measures for their transition, particularly for the most vulnerable households. To avoid a backlash, a clear timeline, with targeted support and a strong and responsive governance is necessary. In this context, clarity matters more than "flexibility." Customers and manufacturers alike need a clear signal to retool and invest.

The reality is unavoidable: the internal combustion engine will disappear, whether in 2035 or shortly thereafter. Hard-to-abate sectors like steel and aluminum will also have to undergo profound transformation. The clean technologies that enable this transition will drive tomorrow’s growth. There will be no grace period in the global race for green leadership. Delaying action might bring temporary relief during a period of sluggish growth, but it would leave Europe dangerously unprepared for what lies ahead - and locked into dependency on others.

China has already positioned itself in strategic industries of the future, from batteries to solar panels, and is steadily becoming the world’s transition leader. Europe must urgently identify the sectors where it intends to retain or build leadership, and act decisively to scale production and innovation while its early advantages still matter.

Failure to transform will be costly. A recent study by the University of Mannheim and the ECB estimates that the extreme climate events of this summer alone caused €43 billion in lost output. By 2029, the cumulative economic toll of heatwaves, droughts, and floods could triple to €126 billion. France is among the most exposed countries, with projected losses rising from €10 billion in 2025 to €34 billion by 2029. The French Cour des comptes calculates that financing the ecological transition would cost around 1.2% of GDP annually, whereas the cost of adaptation alone could soar to 15% of GDP if action is delayed.

In other words, inaction is far more expensive than transformation. Weakening Europe’s targets now will only increase the frequency and severity of climate disasters, harming both citizens and the economy. Transitioning is not just an environmental imperative - it is, as the Cour des comptes puts it, a "rational and economically sound decision."

Europe must therefore anchor its climate ambition in a bold industrial strategy. This means shielding strategic sectors while equipping them to transform, accelerating innovation and scaling clean technologies, and building a competitive market in which carbon-free European products are the natural choice for manufacturers and consumers alike.

The alternative is drift: a Europe that defends yesterday’s industries, loses tomorrow’s markets, and bears the rising costs of climate inaction.

Rather than undermining their green policies, Europe and its member states - particularly the Weimar Triangle: France, Germany, and Poland - must seize this moment to resolve their political divisions and forge a common path. This means agreeing on three pillars: a strong 2040 target, a credible net-zero roadmap for the automotive sector, and a coherent European industrial strategy that benefits all regions - West, East, South, and North - even when industrial relocation is necessary for transition reasons.

Copyright image : NICOLAS TUCAT / AFP
Ursula von der Leyen at a press conference on September 16, 2025, in Brussels.