Europe's Climate Almost-Epiphany

"If you didn't believe in miracles before, maybe it's time to start. The European Union on Wednesday released a new economic-growth strategy that goes easy on climate-change pieties and focuses instead on more private investment. In Europe, this counts as both a sign and a wonder.

The plan, formally the Competitiveness Compass for the EU, is Brussels's attempt to meet economic challenges from the U.S. and China while assuaging European voters worried about stagnating economic growth. One of the flashier proposals is to rethink the EU's electric-vehicle mandate, which currently requires all new cars and vans to be zero-emissions by 2035.

European Commission President Ursula von der Leyen, whose brainchild this report is, hints at some new flexibility in the intermediate targets that already are taking effect. She suggests the rule could change to be technology-neutral -- meaning it won't mandate battery cars.

This is a far cry from the unshackling of the U.S. auto industry President Trump is attempting via executive orders. But Brussels is all but admitting its mandates are killing Europe's auto industry, and recognizing you have a problem is the first step toward fixing it.

Brussels also promises a big green regulatory simplification. Ms. von der Leyen wants to reduce by 25% the cost of filling in EU-mandated paperwork and other administrative hassles for businesses, and to cut that cost by 35% for small businesses. In the cross-hairs are recent EU rules requiring companies to report on carbon emissions and other environmental effects along their global supply chains. Better late than never to admit this is an investment and jobs killer.

A European growth plan is still European, so there's some dubious industrial policy. That includes diverting cash from public-works projects to industrial research, and a dollop of trade protectionism, especially against Chinese EVs and foreign steel. But there are surprising moments of insight. Brussels wants to reform financial regulations to make it easier for Europeans to invest in growing companies as Americans can via U.S. capital markets.

That was among the most important ideas former Italian Prime Minister Mario Draghi included in his report on Europe's lagging competitiveness last year. Most officials and commentators at the time focused on what they interpreted as his call for 800 billion euros in extra government spending, so it's a relief to see someone read the rest of his report about deregulation.

Ms. von der Leyen's "compass" is far from a one-stop solution to all Europe's economic problems. But it's the closest Brussels has come to admitting that Europe's climate fixations are killing prosperity. If this augurs the start of bigger rethinks to come, perhaps the continent's decline isn't inexorable." [1]

1. Europe's Climate Almost-Epiphany. Wall Street Journal, Eastern edition; New York, N.Y.. 01 Feb 2025: A12.