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1. Implementing the EU Nature Restoration Law: exploring pathways for member states

Author:
Heather Grabbe, Bas Heerma van Voss, Camille Mehlbaum, and Sjoerd van der Zwaag
Publication Date:
06-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The European Union Nature Restoration Law (NRL) entered into force in 2024. The NRL sets quantitative restoration targets aimed at improving natural habitats that are currently in poor condition, with substantial leeway for countries to choose implementation pathways that fit their priorities. This Working Paper examines three pathways: (1) evenly spreading restoration efforts across all ecosystems; (2) prioritising cost-efficiency; and (3) maximising carbon sequestration. Each approach yields vastly different outcomes. This paper provides insights into the trade-offs. For countries seeking to minimise costs in the short run, an 81 percent reduction in costs over the period 2025-2030 is possible compared to a baseline scenario of an even restoration of all ecosystems. Countries that aim to maximise carbon sequestration benefits can achieve a 54 percent increase in climate impact over the same period. However, the different pathways converge after 2040. Prioritising cost minimisation in the early years could lead to higher costs later if delays in investment in the more costly restoration projects allow habitats to continue to degrade. Maximising cost-efficient carbon sequestration is possible, allowing relatively low investment costs and high sequestration. Countries should adopt a holistic approach to pathway selection, considering the full spectrum of ecological and societal gains alongside climate mitigation. Land ownership is an important factor that shapes feasible and effective pathways. In countries such as Spain and Germany, where private entities own substantial shares of agricultural and forest lands, policies should incentivise private investment, including through norms, subsidies or pricing mechanisms. Countries with substantial public landholdings, such as the Netherlands, may find it easier to implement direct restoration projects. These structural differences will influence the cost and pace of restoration and also the design of policies and governance mechanisms to ensure compliance with NRL targets.
Topic:
Climate Change, European Union, Decarbonization, Green Deal, Energy, and Carbon Sequestration
Political Geography:
Europe

2. Not yet Trump-proof: an evaluation of the European Commission’s emerging policy platform

Author:
Heather Grabbe and Jeromin Zettelmeyer
Publication Date:
01-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The economic strategy being defined by the 2024-2029 European Commission seems to follow the prescriptions on innovation and single market reform, and the expansive approach to industrial policy, set out by Mario Draghi in his September 2024 report on European Union competitiveness, with two important differences. First, the Commission stops short of calling for World Trade Organisation-prohibited subsidies – this is welcome. Second, the Commission proposes a new state aid framework for national industrial policy rather than expansion of EU-level public investment funding. This runs the risk of weakening the single market and harming competition, with the unintended consequence of protecting incumbents and inhibiting structural change. In terms of specific policies, on defence, the Commission is right to face up to the challenge of defining an EU procurement mechanism that offers sufficient speed and cost advantages to justify large-scale funding. On economic security and international partnerships, the Commission is right to take a broader approach than a foreign economic policy focused only on supply chains. What is lacking is a much greater commitment to providing support for climate mitigation in developing countries. The second Trump presidency creates risks for the Commission strategy. President Trump has gone further than expected in threatening territorial expansion and with the speed, aggression and disregard for the rule of law with which he has started to implement his policies. These factors will complicate the EU-United States relationship. The best defence against both Trump and the competitive and security threats posed by China is to accelerate policies that address the EU’s structural weaknesses: raising productivity growth, defence capacity and economic security. Economic security, in turn, requires more resilient trade relationships, less financial dependence on the US and an improved standing with emerging market and developing economies. The EU should also seize the opportunity offered by the shift in US policy from subsidies to deregulation. While the EU should not race Trump to the bottom on environmental or financial deregulation, it should rapidly improve its own regulatory framework while building on its core strengths: human capital and the rule of law. Unlike tariff wars or discriminatory subsidies, a competition to provide a good business environment is not a zero-sum game.
Topic:
Security, Economics, Industrial Policy, Budget, European Union, Digital Economy, Trade Policy, Donald Trump, Sustainability, European Commission, and Energy
Political Geography:
Europe and United States of America

3. Europe’s energy information problem

Author:
Ben McWilliams, Simone Tagliapietra, and Georg Zachmann
Publication Date:
02-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Comprehensive information on energy-related topics, such as take-up of heat pumps, industrial natural gas consumption and prices, and battery connections to the electricity grid, is either not available in Europe in a timely manner, or not available at the level of granularity, reliability and consistency needed for informed decision-making. Certain information is simply not collected, while other information is collected but is not comparable or consistent across Europe, or is hard to access. European policy targets, such as greenhouse-gas emission reduction pathways, are evaluated using models for which input assumptions and parameters are not public knowledge. It should be a European Union priority to improve this situation. Doing so will enable better decision-making by policymakers and companies. This is especially relevant when Europe faces the triple challenge of decarbonisation, ensuring security of energy supply and growing its internationally competitive energy-consuming industries. The EU status quo is that good energy information is provided by a mix of institutions, agencies, national bodies, industrial associations and non-governmental organisations, but with substantial room for improvement. Lessons can be learned from the United States Energy Information Administration and the European Environment Agency, which was established to better coordinate climate data. Improving energy information will involve difficult political decisions. A process should be started to evaluate the options and to measure the continued cost of inaction.
Topic:
Climate Change, European Union, Institutions, Green Deal, and Energy
Political Geography:
Europe

4. Europeans still want climate action, but don't trust governments to deliver

Author:
Jan Eichhorn and Heather Grabbe
Publication Date:
02-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The vast majority of Europeans continues to support action to combat climate change, but many are losing faith in governments to deliver a transition that is effective and fair. Based on a large-scale questionnaire answered by nearly 8000 people in five EU countries in 2024, with a comparison to responses from 2020, we find that Europeans continue to worry about climate change and want effective action to combat it, even though the pandemic and the Russian invasion of Ukraine significantly increased their concerns about economic and physical insecurity. Scepticism about the causes of climate change has risen a bit, and concern about adapting to its impact has grown. People across all income groups, particularly in France, Germany, Italy and Sweden, feel negative about the outlook for their economic future and their governments’ ability to improve it. People who feel politically disaffected think that decisionmakers are not taking their views and interests into account when making economic and climate policies. Some people are now shifting their attention away from action against the climate crisis towards adaptation, but this does not mean they are less concerned about climate change. Instead, for some people, it is an expression of their disillusionment with state institutions – and this feeling is present among supporters of parties across the political spectrum. Worry about climate change is equally spread across all socio-economic groups. Closer examination of attitudes in Germany, using evidence from focus groups, which we also discuss in this Policy Brief, reinforces the finding of increasing scepticism about the German government’s ability to manage the climate crisis. If political leaders want the public to continue to support climate policies, they must engage proactively now to avoid even greater loss of confidence in government. If governments go soft on efforts to combat the climate crisis now or delay action, they will not meet voters’ demand for an effective and just transition. Moreover, hesitation and delay would boost populist and far-right actors’ efforts to sow doubt about the causes of climate change and whether policies will be effective.
Topic:
Climate Change, Elections, Populism, and Energy
Political Geography:
Europe

5. Who should be charged? Principles for fair allocation of electricity system costs

Author:
Conall Heussaff, Eva Jüngling, Simone Tagliapietra, and Georg Zachmann
Publication Date:
04-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The high costs in the European Union of supplying electricity can only be structurally reduced through decarbonisation and deeper European electricity system integration. In the short-term, policymakers have few choices. They can redistribute system costs by shifting components from one consumer to another. Another immediate distributional option would be to reduce energy taxation, implicitly shifting costs to the taxpayer. Meanwhile, decision-making processes that translates electricity system costs into final consumer prices are fragmented. Rules on the short-term production, transmission and consumption of electricity are determined at EU level. National regulators and governments determine how the fixed costs of the system are recovered from consumers, while national policymakers also set energy taxes. This Policy Brief sets out options for shifting the fixed costs of the electricity system between consumers, for changing energy taxation to reduce prices and for evaluating systemic trade-offs between system cost and other characteristics, such as sustainability and reliability. We also estimate the quantitative effects of shifting costs between consumers and reducing taxes on electricity. We set out four principles for pricing electricity fairly. Policy interventions in the electricity system should not seek to achieve broader economic objectives at the expense of energy-policy goals. Consumer prices should incentivise efficient system operation. Carbon emissions should be priced in. The fixed costs of the electricity system should be primarily recovered from inelastic consumption. European policymakers should develop transparent analytical tools to assess the distributional effects of electricity-policy interventions. Lessons should be learned from the energy crisis, during which EU and national policies attempted to shield consumers from price impacts, and these lessons should form the basis of ongoing efforts to reduce prices. EU guidelines for electricity cost recovery should be established, following fundamental economic principles, and could form a policy toolbox for national governments to reduce energy prices. Finally, the long-term strategic goal of deeper physical and institutional integration of the European electricity should be pursued to structurally reduce electricity prices.
Topic:
Climate Change, European Union, Electricity, and Energy
Political Geography:
Europe

6. Reconciling the European Union’s clean industrialisation goals with those of the Global South

Author:
Ben McWilliams, Simone Tagliapietra, and Jeromin Zettelmeyer
Publication Date:
07-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Clean industrialisation is a political and economic priority for the European Union. For it to work, affordable clean energy is needed. However, producing this energy in Europe is constrained by limited renewable energy endowments (sunshine and wind) and land availability, while the transportation costs for imported clean energy (in the form of electricity or hydrogen) are much higher than for fossil fuels. An alternative way to fuel Europe’s clean industrial sector would to import energy-intensive primary tradeable products such as ammonia, methanol and reduced iron. We estimate that more than ten percent of total future EU clean energy demand will be met by such products. Public policy in Europe should aim to facilitate trade in energy-intensive intermediate inputs, which are cheaper to import than energy directly. Imports of these inputs could boost the competitiveness of downstream stages in the energy-intensive value chain (such as steel production). By lowering overall energy demand and thus electricity prices, such imports would also raise EU competitiveness more broadly. In many cases, they would replace imports of less energy-intensive commodities such as iron ore, therefore not adding to Europe’s overall import dependency. The direct economic impact in terms of jobs and value added that would be offshored is not substantial. The international benefit of such a strategy would be that it would embed third countries – especially emerging and developing economies – into clean industrial value chains. Stable European demand can help such countries develop export-driven, clean industrial strategies. Politically, this could be an important incentive that could offset the EU’s carbon border adjustment mechanism. Governments should therefore not use taxpayer money to fight the relocation of energy-intensive and tradeable primary products, beyond some minimum threshold that is desirable for economic security and innovation reasons. Meanwhile, ongoing negotiations with third countries to establish Clean Trade and Investment Partnerships should put trade in energy-intensive clean products at the core of new international clean supply chains.
Topic:
Industrial Policy, European Union, Global South, Industrialization, Decarbonization, Energy, and Emerging Economies
Political Geography:
Europe

7. From Interconnection to Integration: German-Italian Energy Relations and the SoutH2 Corridor

Author:
Pier Paolo Raimondi and Wolfgang Münchau
Publication Date:
01-2024
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
On 22 November 2023, the German Chancellor, Olaf Scholz, and the Italian Prime Minister, Giorgia Meloni, signed a German-Italian Action Plan.[1] The Plan promises greater collaboration between the two countries on the biggest challenges currently facing Europe. Among these priorities is environmentally sustainable economic growth and the acceleration of climate protection. While the Action Plan is relatively terse, focusing on the establishment of fora for greater cooperation rather than providing a detailed roadmap, its energy and climate section does highlight a specific project as an example of closer cooperation: the acceleration of the completion of the so-called South-Central Corridor for the transport of hydrogen throughout Europe. This Corridor has the primary function of enabling the import of hydrogen produced in North Africa into the very core of Europe and thus to the high-demand areas of Germany and Northern Italy. One especially important part is the so-called SouthH2 Corridor, which includes a pipeline running the entire length of the Italian peninsula before connecting to Southern Germany via Austria. There are strong political and strategic arguments for a deeper energy cooperation between Italy and Germany, despite some differences.[2] Hydrogen and gas infrastructure is a key area where intensified cooperation is crucial.[3] Through the SouthH2 Corridor, the two countries have indeed expressed their willingness to collaborate precisely on hydrogen infrastructure, notably the SoutH2 Corridor. However, such cooperation cannot be limited to the infrastructural part; it must extend to a series of related issues in which both countries should seek to align their political and legal initiatives, starting from overcoming uncertainties regarding the development of hydrogen demand and the use of other net-zero technologies in both countries. In short, cooperation on infrastructure can be used as a jumping off point for a deeper collaboration on and exchange of information about their broader transition strategies. Such bilateral coordination would also contribute to the achievement of EU Green Deal objectives more broadly.
Topic:
Climate Change, Bilateral Relations, Natural Resources, Regional Integration, Pipeline, and Energy
Political Geography:
Europe, Germany, and Italy

8. The State of EU-US Digital and Energy Cooperation

Author:
Federica Marconi, Wolfgang Münchau, and Irene Paviotti
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
In a time of rapid technological advancements and changing energy paradigms, the European Union and the United States are trying to coordinate their efforts to navigate the complexities of an ever-evolving landscape. Transatlantic dialogues and cooperative endeavours are key mechanisms for mitigating tensions and fostering a common assessment of the opportunities and risks arising from these advancements. Critical in this regard are the problems of governance emanating from technological development and its consequences in the digital sphere as well as the delicate balance between security, competitiveness and environmental targets in the energy dimension.
Topic:
Climate Change, International Cooperation, Political Economy, Governance, European Union, Transatlantic Relations, Digital Policy, and Energy
Political Geography:
Europe, North America, and United States of America

9. Germany’s Strategy on Climate Foreign Policy: Balancing Sustainable Development and Energy Security

Author:
Jeanette Süß
Publication Date:
03-2024
Content Type:
Case Study
Institution:
Institut français des relations internationales (IFRI)
Abstract:
With the war in Ukraine, Germany’s “traffic light” coalition government has had to adapt its climate policy to the upheavals caused by this war, which has turned its economic, energy, and military model upside down. Against a backdrop of high energy costs and increasing calls for reshoring in Europe, German industry is looking at how to maintain its competitiveness while decarbonizing its industry. To combat climate change and find new forms of energy cooperation that are more sustainable for the planet, the federal government has set up a Strategy on Climate Foreign Policy bringing together its collaborative actions with partner countries. Climate, energy, and development partnerships play a vital role in this context, and emerging countries are key partners for climate initiatives. They have a high demand for energy and exploit resources, though without always respecting environmental, social, and governance standards. Their renewable energy (RE) production potential is significant, and there are major opportunities for CO2 reduction thanks to modernization technologies that Germany is seeking to transfer to its partners. To this end, Germany is using a multitude of diplomatic tools and is leveraging a unique network of international agencies, chambers of commerce and climate finance players.
Topic:
Climate Change, European Union, Sustainable Development Goals, Renewable Energy, and Energy
Political Geography:
Europe and Germany

10. The changing dynamics of European electricity markets and the supply-demand mismatch risk

Author:
Conall Heussaff and Georg Zachmann
Publication Date:
07-2024
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Meeting Europe’s 2030 climate targets will require massive clean-electricity investment. To facilitate these investments, state-backed de-risking schemes such as contracts for difference (CfDs) are needed. Their role in supporting renewables has been consolidated by the European Union’s recently agreed electricity market design reform. Under such state-backed schemes, the distribution of costs between the market and the state will depend on the balance of supply and demand. Lower demand will decrease spot-market prices, reducing market costs but increasing the cost to CfD-issuing states. If electrification of European energy demand does not keep pace with the electricity supply expansion, tens of billions of euros annually could be channelled through state contracts, generating costs that must ultimately be recovered from consumers. A cost-efficient, managed transition will require European coordination of electricity supply, demand and network investments. Clean electricity supply and demand should be synchronised through a combination of state interventions and market mechanisms. Undersupply of clean power will mean a failure to meet climate targets, but oversupply can be costly too. To manage the costs of renewable de-risking schemes and to accelerate energy-system decarbonisation, flexible electricity systems should be promoted, policies to encourage electrification could be implemented and cost-recovery arising from state-backed renewable support schemes should be fair.
Topic:
Climate Change, Markets, Electricity, Energy, and Supply and Demand
Political Geography:
Europe