MNI: EU 'Industrial Group' Countries Take Aim At Green Agenda

A new "industrial group" of the European Union’s biggest economies is forming which will argue for the bloc to deprioritise the green transition and for a tougher line in trade talks in the coming months, officials told MNI.

Centre-right governments in Germany, France and Italy, as well as the Netherlands, Belgium, Austria and Luxembourg made clear at last week’s summit that climate policy should take a back seat to the EU's competitiveness agenda, the officials said. Their arguments will be outlined in papers and discussion documents in coming months, they added, without saying what these would contain.

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Estonia’s former Ambassador to the EU, France and Germany Clyde Kull said the group's "goal is to ensure Europe remains an “industrial continent,” not just a regulatory one. The bloc’s emergence is a sign that countries are willing to form “coalitions of the willing” in order to advance on key items for Europe’s competitiveness, officials said, citing the call by former ECB chief and Italian prime minister Mario Draghi for member states to advance on politically difficult projects, such as banking and capital markets union and joint funding for defence and public goods. (See MNI: Beijing, EU Hope For Deal - Advisors)

The formation of the group comes as many countries are also pushing for steps to reduce the impact on consumers and companies of ETS2 carbon pollution charges set to be imposed on residential heating, road transport and small businesses from 2027. (See MNI: EU Likely To To Limit Fuel Price Hit From ETS2 CO2 Scheme)

However, another official noted that topics like industrial policy, which require new funding sources, remain divisive, pointing to disagreements between France and Germany which have brought a EUR100 billion fighter project with Spain to a standstill. 

There is also disagreement on trade issues within the group. While French President Emmanuel Macron pushed the Commission at the summit to deploy its so far unused anti-coercion instrument in retaliation for Chinese rare earth restrictions, Germany’s Chancellor Friedrich Merz was more cautious, only going so far as not to rule it out.