Updated: Jun 24, 2022
From the 1st of January Emmanuel Macron and his cabinet have embarked on an ambitious course for the European Council. They begin their tenure of the rotating presidency at a moment that could not have been more strenuous for Europe as a whole, and for the French electorate more specifically. As the continent grapples with an ongoing energy crisis, compounded by rising military tensions at its Eastern border and continued pressure on European healthcare systems, the French are once again faced with the imprévu.
The biggest problem for their EU presidency, however, will come with the highly anticipated announcement of Macron’s candidature for another term at the Élysée. Leading up to the presidential elections in April, he and his team will have to balance the expectations of his electorate, deflect attacks from his domestic opponents and appease conflicts between the various EU member-states. The policy issue that will give Macron the hardest time in managing these three dimensions is the current flurry surrounding the EU’s climate policy, especially with regards to the Commission’s Fit for 55 package, and the debate around green taxonomy, both of which will be analysed in turn.
The Fit for 55 package does not include new laws per se, but revisions to existing laws which were proposed in July and December last year, and have since been met with serious criticism, especially with regard to the EU Emissions Trading System (EUETS). While some green parties and grassroots activists denounce its lack of ambition, several Eastern European member-states dread the scope of the package, as the current energy crisis sits at the top of their domestic agendas, alongside concerns for those vulnerable to the social and financial costs of a green transition.
The EU ETS is a market-driven mechanism that limits the absolute amount of greenhouse gasses that can be emitted by the entities covered in the scheme, requiring them to buy 'emission allowances' from national governments to cover their extra greenhouse gas output. The scheme currently spans several sectors from power and heat generation to energy intensive industrial sectors and aviation. The main point of contention lies with the proposed expansion to cover maritime and road transport as well as buildings, all in an attempt to cover the Commission’s new ambitious target of a 55% reduction in emissions by 2030. Unsurprisingly, the affected industries have reacted vehemently. A coalition of European aviation giants (including Lufthansa, Air France and KLM) decried the implementation of a kerosene tax and the lack of specificity regarding the environmental protection surcharge that would weaken their position vis-à-vis non-European partners, while the World Shipping Council opposed the latest draft by the European Parliament in which vessel operators are deemed ‘responsible entities’ and thus the main targets of EU ETS costs.
Challenges to the French presidency, however, extend beyond industrial strongholds. Within the EU, opposition comes from the East, especially from Poland, where the Constitutional Tribunal has been used to legitimize the country’s opposition to the package. In the case of Poland, the fundamental issue relates to the country’s lack of energy market liberalization and the deliberate exclusion from the narrative of the leverage of national governments in spending the surplus of income from the ETS in softening any adverse effects on their citizens. Nonetheless, Poland has gained (partial) support from a series of EU members, including the Czech Republic, Denmark, Sweden, Portugal and Spain, which is bound to cause heated conflict in the Council with ETS defenders like Germany. The Élysée itself is more reluctant to comply with the Commission’s plans to expand the EU ETS, fearing domestic backlash from small businesses and the broader population, the memory of the 2018 gilets jaunes protests deeply ingrained in the government’s energy policy.
The current debacle over the Union’s taxonomy for sustainable activities has only complicated matters for the French presidency. The labeling system is aimed at incentivising investment into environmentally sustainable activities and preventing greenwashing. Earlier this year, the Commission considered expanding the green label to cover nuclear power and fossil gas, and has now decided to continue with the proposal, in spite of the backlash, and include them in the list of ‘transitional’ resources. The proposal will have to pass the European Parliament, where the odds seem stacked against it: a simple majority would be enough to table the proposal, and with many EP groups voicing their discontent - including the Socialists, and Democrats, the Greens, and the Left - a real challenge has arisen for the Commission, as well as for the French presidency.
The stakes are high for Macron, for the French have a deep interest in seeing a green label on nuclear power plants. Not only does the industry account for the third largest share of the workforce, but also for 70% of French energy consumption, and has a fundamental role in the stability of the European energy market. While Macron’s 2017 presidential platform included a reduction of reliance on nuclear power to 50% by 2035, he has been equally vocal about his continued support for the industry and his plans to renew the fleet of 56 nuclear reactors via investments in small-scale modular reactors. Furthermore, his domestic opponents have also emphasized the centrality of nuclear power in their energy policies, including his two biggest contenders: Pécresse and Le Pen. While the European People’s Party has been somewhat split over the issue of taxonomy, the Renew Europe group (often the kingmakers of the EP) are bound to vote in support of the proposal, as Macron’s LREM is the biggest member party of the group.
In either case, the electoral pressure might undermine Macron’s standing in the EU forum: even if he does succeed in molding the EU ETS and in revising EU taxonomy to cover nuclear energy, he risks doing so by twisting many arms in the Council, unless his position is delivered as available one for the future of the EU in its entirety. While the rotating presidency has always had unquestionable effects on the domestic standing of the incumbents, going against the tide in order to advance domestic agendas sets a dangerous precedent for future presidencies and undermines the legitimacy of the Council - and of the EU as a whole. This will only stoke the growing dissatisfaction with European policy-making, ceding political points to the eurosceptics. As suspicions over the instrumentalisation of the presidency grow, it will take genuine leadership to bring about lasting consensus in the Council and to appease any resulting frustration in the French domestic sphere.