The International Dimension of European Climate Policy

Integrating climate policy and competitiveness

One reason is the crisis in Europe’s industry and its competitiveness, topics that have become the focus of political debate follow­ing the report by former European Central Bank President Mario Draghi in September 2024. Commission President von der Leyen announced that she would present a Clean Industrial Deal within the first 100 days of her new term as part of her endeavour to buttress the progress in climate policy of the past five years with industrial policy. In addition to von der Leyen’s programme, the composition of her College of Commissioners signals that economic security, competi­tiveness and strategic autonomy will shape the EU’s agenda until the next elections in 2029. The new division of responsibilities is a clear attempt to link climate policy more closely with competitiveness.

Spanish social democrat Teresa Ribera’s area of responsibility illustrates the attempt to fuse climate protection and competitiveness. As the first Executive Vice-President of the Commission and head of the influential Directorate-General (DG) for Competition, she is responsible for the portfolio promot­ing a clean, just and competitive transition. She will be working closely with French Liberal Stéphane Séjourné, who is Executive Vice-President for Prosperity and Industrial Strategy and Head of DG Internal Market, Industry, Entrepreneurship and SMEs (small and medium-sized enterprises). At the level of subordinate Commissioners, Wopke Hoekstra (Netherlands, European People’s Party – EPP) in DG Climate Action; Jessika Roswall (Sweden, EPP) in DG Environment; Dan Jørgensen (Denmark, Socialists & Demo­crats – S&D) in DG Energy; and Maroš Šef­čovič (Slovakia, S&D) in DG Trade will be re­sponsible for key interfaces in the new Com­mission for climate policy developments.

Thus, each of the three major political parties (EPP, S&D, Renew) are leading important climate-relevant portfolios to ensure balance and cooperation between them. However, the intense debates in the European Parliament during the hearings of the designated Commissioners indicated that – as in the previous term – the com­position of responsibilities roughly outlines the actual influence of individual DGs and Commissioners, while controversial issues are deliberately kept open and subject to overlapping responsibilities. Both the lack of clear prioritisation and the structural diffusion of responsibilities are likely to complicate rather than help manage con­flicts in this legislative-laden policy area.

Tensions between domestic and foreign climate policy

The Commission’s division of labour does not take the tensions between the internal and external dimensions of climate policy sufficiently into account, despite the fact that several instruments adopted as part of the Green Deal have had significant im­pacts on international partners and are already causing diplomatic upheavals. The external dimension of European climate policy only appears on the margins of the mandate of the new High Representative for Foreign Affairs and Security Policy, Kaja Kallas (Estonia, Renew), who, as Vice-Presi­dent of the Commission, also heads DG International Partnerships (INTPA). Von der Leyen’s political guidelines also do not address this interface strategically or insti­tutionally. The central challenge is there­fore not only the much-discussed relationship between the portfolios for energy and climate policy (Ribera) and industrial and trade policy (Séjourné), but also their re­spective relationship to foreign and devel­opment policy (Kallas). A key field of action for ambitious climate policy remains up in the air. Tackling it would require more coordination, especially with regard to new industrial and trade policy measures.

International dimension of the European Green Deal

A number of legal acts of the Green Deal impact international partners. This inter­national dimension should be conceptualised as part of EU climate policy, which is often presented as consisting of three pil­lars – firstly the Emissions Trading System (ETS) I; secondly the Effort Sharing Regu­lation (ESR) and ETS II; and thirdly land use, land-use change and forestry (LULUCF). As a conceptual overview, Figure 1 shows the European Climate Law and the three pillars as the inner core of European climate pol­icy. An outer ring consists of selected legal acts from the Green Deal that contain obligations for member states but also have an impact on trading partners outside the EU’s internal market (for a brief explanation of the selected legal acts, see Table 1).

Internal barriers to the integration of domestic and foreign climate policy

The CBAM example clearly shows that the current institutional logic is not adequate. At the interface of European and international climate policy, unclear responsibilities, different internal EU objectives and ad hoc diplomacy are leading to enormous resistance in partner countries.

Within the Commission, a large number of DGs are involved in EU climate diplo­macy. Key players are DG Climate Action, which conducts international climate nego­tiations and partnerships in addition to its domestic policy competencies; the Euro­pean External Action Service (EEAS), which is responsible for coordinating the EU’s foreign policy activities; and DG INTPA, which plays a central role vis-à-vis develop­ing countries and in the area of climate finance, with formats such as the Global Gateway (GG) initiative and the Just Energy Transition Partnerships (JETPs).

However, in view of the division of labour and von der Leyen’s “Mission Letter” to Kaja Kallas, it is also clear that climate diplomacy and EU foreign policy will continue to be conducted in separate spheres. This makes greater integration structurally more diffi­cult. More coordination would be particularly important in light of the competencies of the EU – where foreign policy is pri­marily determined by member states, but climate policy is largely determined at the EU level. An additional challenge is posed by the inter-institutional position of the EEAS, whose role regarding the new eco­nomic foreign policy and issues of economic security remains unclear.

Beyond the DGs, other European institutions need to be more closely involved. This includes the European Parliament, which is a minor player on climate diplomacy but a major one on Green Deal legislation. Such an approach requires a political-strategic framework that sets out principles of co­operation as well as substantive goals. The conclusions of the Foreign Affairs Council, which annually define the EU’s energy and climate diplomacy priorities, are a first step in this direction.

In practice, however, they rarely function as an actual basis for EU-wide action and do not solve coordination problems between the Commission’s DGs. In the ab­sence of an overarching strategy, priorities resulting from the logic of individual insti­tutions or DGs dominate. This sends contra­dictory signals to the EU’s partners about the external dimension of European climate policy.

A foreign policy flanking the European Green Deal

As the importance of European competitiveness has increased, there is now greater pressure to justify climate policy than there has been during the past five years. Strategi­cally linking domestic and foreign climate policy provides two opportunities. Firstly, synergies between Green Deal measures and international competitiveness can be identified and driven forward through new initiatives. There is great potential here, especially for strategically important tech­nologies and supply chains that are relevant in the transition to net-zero greenhouse gas emissions. Secondly, a structured approach to the external dimension of European climate policy offers an important starting point to ensure that new instruments such as the CBAM do not primarily act as a source of tension for partners, but serve as compo­nents of new alliances by being diplomatically supported and embedded in broader initiatives.