When President Trump shredded U.S. climate policies last year, much of the Western world chastised him for ignoring climate change. Now, Europe, the U.K. and Canada are walking back their own environmental regulations.
The European Union has proposed to relax its landmark carbon-pricing system, and allow automakers to sell gasoline-burning cars for longer. The U.K. appears poised to allow new oil production in the North Sea—after banning exploratory drilling last year—and is reviewing targets for sales of electric vehicles. Canada
When President Trump shredded U.S. climate policies last year, much of the Western world chastised him for ignoring climate change. Now, Europe, the U.K. and Canada are walking back their own environmental regulations.
The European Union has proposed to relax its landmark carbon-pricing system, and allow automakers to sell gasoline-burning cars for longer. The U.K. appears poised to allow new oil production in the North Sea—after banning exploratory drilling last year—and is reviewing targets for sales of electric vehicles. Canada dismantled an unpopular carbon tax and is backing new oil-and-gas infrastructure.
Europe’s slow-walking of its climate measures is notable because the continent has long been at the vanguard of climate action. But its aggressive plans to transition away from fossil fuels are running up against concerns that the policies are stifling industry by pushing up energy prices.
“The Green Deal had been a central focus of Europe,” said Daniel Yergin, a veteran energy historian and vice chairman of S&P Global. “Now, for Europe, the focus is obviously on security and on being economically competitive.”
Europe’s shift appears subtle compared with the Trump administration’s chainsawing of U.S. green policies, but it shows that the continent’s lofty goals have tested the limits of what is politically possible to fight climate change.
Europe had been charging ahead on renewables: Wind and solar now account for 34% of the continent’s power generation, compared with 20% in 2021. The EU still maintains that it can curb its greenhouse gas emissions by at least 55% by 2030 compared with 1990 levels, and to reach net-zero emissions by 2050.
An April report by the European Environment Agency said that achieving the EU minimum target of 42.5% renewable energy by 2030 will require doubling the average renewable project deployment rate when compared with the past decade.
European fossil fuel companies that once touted renewable goals, including Shell, BP and Norway’s Equinor, have dialed them back and doubled down on more profitable oil and gas. Shell called off a biofuels plant in the Netherlands. BP said it would reduce spending on projects to transition to a greener energy future by more than 70% a year, and only invest in top-tier offshore wind and solar projects in a “capital light” way. Equinor recently abandoned its target to install 10 to 12 gigawatts of renewable power by 2030.
Developed nations are increasingly balking at the cost of measures to cut down on fossil fuels—despite scientists’ warnings that climate change is exacerbating extreme weather events, including the wildfires that are turning Europe’s forests into ashes this summer and intense heat and a lack of rain cause its rivers to run dry.
Germany, Europe’s biggest economy, has seen growth stall as households and businesses pay some of the highest electricity bills in the world. Faced with growing discontent, authorities have cut taxes and fees used to subsidize renewables. Lawmakers also rolled back a controversial mandate that would have required most Germans to install costly renewable systems to heat their homes, in favor of letting them continue to burn oil and gas.
European industry was hit hard by a big increase in power and natural-gas prices in recent years. That was largely because its supply of Russian fuel was slashed in the months after the full-scale invasion of Ukraine in 2022, forcing the bloc to import tens of billions of dollars’ worth of more expensive natural gas from the U.S. But the EU’s decision to tighten its climate regulations also played a significant role in the rising price of electricity.
The bloc said in 2021 that it would cut the number of emissions allowances on the market, sending their price soaring, which in turn helped drive up the price of power. Emissions allowances now account for a quarter to a third of the EU’s wholesale power price. Cement makers, steel producers and other energy-intensive industries are only partly compensated by government rebates.
The chief executives of heavy industries have denounced the policies, citing crippling energy and carbon costs as some of the reasons they have shut down factories. British chemical maker Ineos said last year it planned to shut two plants in Germany, after closing plants in the U.K. and Belgium and mothballing facilities in France and Spain.
“Europe is committing industrial suicide,” Stephen Dossett, chief executive of subsidiary Ineos Inovyn, said at the time.
Last month, the EU proposed to keep more allowances on the market over the next 15 years to ease the impact on industry. The bloc says the change still will allow the EU to meet its main emissions target—a 90% reduction in greenhouse gases by 2040 compared with 1990—but some analysts believe the proposal could leave the market with an oversupply of allowances. That would crater their price and reduce the incentive for low-carbon energy technologies.
The mounting cost of the EU’s green policies has been sobering. It once described the measures as a new growth strategy that would boost innovation and create new businesses and markets. Since then, the EU has been walking a tightrope trying to stick to its climate aspirations while cutting its businesses some slack—all the while enduring the wrath of the Trump administration.
The Trump administration has repeatedly pointed to the EU as an example of green policies gone haywire to justify its screeching U-turn on U.S. climate policies. U.S. Energy Secretary Chris Wright earlier this year said the “climate cult” had weakened Europe and resulted in jobs lost to Asia and reduced economic opportunities for Europeans.
The EU has also wrestled with internal dissent. Some of its most industrialized members—including Germany, whose manufacturers face severe competition from China—have successfully pressured Brussels to ease climate requirements. Last year, the EU proposed allowing automakers to keep selling gasoline cars after 2035, after initially planning to effectively ban the sale of new combustion-engine cars from that year on. German Chancellor Friedrich Merz had urged the commission to ease the ban.
The group hasn’t been alone in reconsidering its climate policies.
U.K. Prime Minister Andy Burnham’s government said earlier this month it would review electric-vehicle sales targets to ensure they remain “pro-business and grounded in the real world.”
Up for review: A mandate to increase the share of EVs sold annually, and how the U.K. can ensure all new cars and vans are zero emissions by 2035. The auto industry has said that regulation is running ahead of consumer demand and making the sector less competitive.
The U.K. is also weighing whether to greenlight new drilling in the crude-rich North Sea. Burnham said he has told Trump in a phone call that he would take a “pragmatic” approach to developing resources there.
“When people are struggling, you can’t ignore that,” he told reporters last month. Industry trade groups say that new drilling would boost investments and support jobs.
In Canada, Prime Minister Mark Carney, once the face of the global fight against climate change, has dismantled some of the central planks of predecessor Justin Trudeau’s energy policy—including an unpopular consumer carbon tax. His government is supporting more oil and gas drilling, and it has backed several new projects to chill and export natural gas from the coast of British Columbia despite criticism from climate activists.
The Canadian Climate Institute, a policy research organization, said earlier this year that Canada isn’t on track to meet its climate goals, including a 2035 target and net zero emissions by 2050.
Some energy experts say that some of the emission-reduction targets set by governments were unrealistic to begin with, but that they are still worth pursuing to stave off further increases in temperatures.
“What’s not happening is a deeper acceleration of the energy mix to really get carbon out of the atmosphere,” said Lord John Browne, who served as BP’s chief executive until he resigned in 2007 and has called for more climate action. “That’s not on the agenda at the moment.”
Write to Benoît Morenne at benoit.morenne@wsj.com and Matthew Dalton at Matthew.Dalton@wsj.com
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