European Green Deal 2026: Budget, Challenges, and the New Global Climate Order

Update to the original article published in 2020. Update date: March 2026

Topics: European Green Deal · COP30 · Paris Agreement · Carbon Tax · CBAM · Climate 2026

Reading time: about 8 minutes

Author: Marco Arezio

From Madrid's failure to the global test: what has changed in six years

In December 2019, COP25 in Madrid ended with no results. The major polluters—the United States, China, Brazil, India, and Russia—not only showed no willingness to meet the Paris goals, but some even raised the possibility of abandoning the agreement. Europe, led by the new Commission President Ursula von der Leyen, found itself alone in advancing the climate battle.

Six years later, the situation has changed profoundly—and not always for the better. This update analyzes the current state of the European Green Deal, the new geopolitical context following COP30 in Belém (November 2025), and the concrete challenges facing the European Union in 2026.

1. The European Green Deal: from ambitious proposal to binding law

European Climate Law: targets now legally binding

What was a political program in 2020 has become European law in 2021. The European Climate Law, approved by the European Parliament on 24 June 2021, has made legally binding a 55% reduction in emissions by 2030 compared to 1990 levels and climate neutrality by 2050. These are no longer good intentions: individual Member States now have concrete legal obligations.

The "Fit for 55" package: 13 operational reforms

In 2023, the EU approved the Fit for 55 package, which includes 13 related legislative reforms. Among the most significant measures: the revision of the EU Emissions Trading System (ETS) to include buildings and road transport starting in 2027, the phasing out of free aviation allowances—completely eliminated in 2026 with the transition to full auctioning—and the target of a 100% reduction in emissions from new cars by 2035.

The measurable results: emissions drop

The data is beginning to support this strategy. According to the most recent available data, in 2023, EU greenhouse gas emissions decreased by 7% compared to the previous year, bringing the overall reduction to 32.5% compared to 1990. The energy sector led this turnaround, with emissions dropping by 43% thanks to the rapid expansion of renewables and the gradual phase-out of coal. Industry, transportation, and construction showed more modest reductions, but remain among the most difficult sectors to decarbonize.

📌 The EU is still far from the optimal trajectory to meet all its 2030 targets. Political resistance, economic pressure, and geopolitical crises are slowing the transition in several member countries.

2. The European Carbon Tax (CBAM): from a 2020 idea to a 2026 reality

In 2020, when the original article was written, a carbon tax on imports was an embryonic idea, a way to protect European companies from unfair competition from countries that produce without environmental constraints. Today, it's law.

The Carbon Border Adjustment Mechanism (CBAM) entered into force in 2023 as a transitional measure for certain product categories: cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. It is expected to be fully implemented in 2026, with full application to all included sectors and the effective payment of CBAM certificates by importers.

The principle is exactly the one proposed in 2020: those exporting to the EU using fossil fuel energy—which is cheaper but more polluting—will have to pay a price equivalent to that paid by European companies under the ETS. The goal is to eliminate so-called "carbon leakage," or the relocation of emissions to countries with less stringent regulations.

📌 The CBAM represents a revolutionary tool in international trade and has already sparked diplomatic reactions from China, India, and other countries exporting to the EU.

3. COP30 in Belém (2025): history repeats itself, but with new protagonists

The US leaves the Paris Agreement for the second time.

On January 20, 2025, the first day of his second term, Donald Trump signed the executive order "Putting America First in International Environmental Agreements," initiating the United States' formal withdrawal from the Paris Agreement. The withdrawal became effective on January 27, 2026, placing Washington in the select group of countries outside the treaty—along with Iran, Libya, and Yemen.

COP30, held in Belém, Brazil, from November 10 to 25, 2025, was the first UN climate summit without an official US federal delegation since the 1990s. The American absence weighed heavily on the negotiations, weakening the transatlantic coalition that traditionally drove negotiating ambitions.

The outcome of COP30: the Global Mutirão agreement

Despite the challenging context, the conference concluded with an agreement: the Global Mutirão (a Portuguese term meaning a collective community effort). The key points: countries must triple their climate adaptation funding to support the most vulnerable nations; for the first time, all negotiating parties recognized the need to counter climate disinformation; however, the carbon neutrality goal was postponed from 2030 to 2035, a step backward that drew strong criticism.

The New Geopolitics of Climate: China Fills the American Void

The American withdrawal has had an unexpected effect: it has strengthened China's geopolitical position, which is using the energy transition as a tool for global influence.

Ursula von der Leyen, present in Belém alongside European Council President António Costa, reiterated that the Paris Agreement remains "the best path for all humanity" and confirmed that Europe will stay the course, continuing to work with all countries that want to protect the climate.

4. Internal resistance: the Green Deal under political pressure

The backtracking on pesticides and pressure from farmers

The Green Deal's progress has not been without setbacks. Under pressure from European farmers' protests in 2024, the Commission withdrew its proposal for a regulation on the sustainable use of plant protection products (SUR), which called for a 50% reduction in chemical pesticides by 2030. Von der Leyen justified the withdrawal by stating that "farmers deserve to be heard."

The Omnibus Package: Simplification or Downsizing?

In February 2025, the European Commission presented the so-called Omnibus package, a comprehensive overhaul of sustainability reporting rules (CSRD, Taxonomy, SFDR) with the stated aim of reducing bureaucratic burdens for businesses. The package responds to the demands of the Draghi Report on European Competitiveness (September 2024), which called for lighter administrative burdens and greater regulatory predictability. Critics, however, note that easing transparency requirements could make it more difficult to monitor actual progress towards sustainability.

Eastern Europe and Coal: A Multi-Speed Transition

Resistance from Eastern European countries—Poland, the Czech Republic, and Hungary—remains a constant in the domestic debate. Historically dependent on coal for electricity generation, these countries continue to demand flexibility in transition times. The Just Transition Fund, which provides approximately €100 billion per year to support the most exposed regions, represents the main instrument for bridging this gap, but sourcing the resources remains an open political issue.

5. European competitiveness in 2026: structural challenges

The concern that emerged in 2020—the risk that European companies would become less competitive compared to those in countries without environmental constraints—is even more pressing in 2026, exacerbated by new geopolitical variables. The war in Ukraine has accelerated the need for energy diversification, leading to the adoption of the REPowerEU plan in 2022, which allocated 40% of its funds to the supply of safe and sustainable energy. Meanwhile, post-Trump trade tensions with the US and Chinese competition in clean technologies are forcing Europe to strategically rethink its industrial base.

The Draghi Report, published in September 2024, highlighted a European paradox: the EU is a world leader in climate policies but risks losing its industrial and technological leadership precisely in key sectors of the green transition. The EU's response focuses on increased public investment in strategic sectors—technology, sustainable manufacturing, renewable energy—combined with trade protection tools such as the CBAM.

Conclusions: Europe still "alone", but with more solid tools

In 2020, we wrote that von der Leyen found herself alone after the failure of Madrid. In 2026, that loneliness is, in some ways, even more pronounced: the US has withdrawn from the Paris Agreement for the second time, global climate governance is increasingly fragmented, and COP30 demonstrated how difficult it is to maintain international cohesion in the face of economic and geopolitical pressures.

Yet Europe has not stopped. Compared to 2020, the EU now has much more concrete tools: a binding climate law, the operational CBAM, the Fit for 55 package, a reformed ETS, and billions of euros invested through NextGenerationEU. The results in terms of emissions reductions, while insufficient compared to the ideal trajectory, demonstrate that the transition is possible.

The challenge for 2026 is no longer to convince the world that the problem exists, but to demonstrate that the ecological transition can also be a successful economic transition—creating jobs, reducing energy dependence, and strengthening Europe's competitiveness in a world where the rules of the game are rapidly changing.

The intentions, as stated in 2020, are still good. But today there are also more facts, more regulations, and—hopefully—more global awareness. The process is slow, complicated, and costly: it requires a lot of politics and a lot of money. Two ingredients that should still be treated with a pinch of salt.

Sources and further information

European Commission — European Green Deal: commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en

European Parliament — Fit for 55 and European Climate Law: europarl.europa.eu

EU Council — Green Deal History: consilium.europa.eu

Il Sole 24 Ore — US withdrawal from the Paris Agreement, January 2025

Euronews — COP30 Belém, November 2025

Geopolitica.info — COP30, 10 Years After the Paris Agreement, December 2025

Political Report Card — What Happened to the Green Deal, 2024?