Is a new Parliamentary majority recasting the European Green Deal?

The European Green Deal, the flagship initiative of von der Leyen’s first mandate and the backbone of the first concrete EU strategy combining climate and industry, is entering a distinct new political phase. A combination of competitiveness concerns, political backlash in several Member States and opportunistic alliances in the European Parliament is reshaping how the EU deals with climate and sustainability legislation.  

In recent weeks, this shift has been most evident in decisions to narrow EU sustainability reporting and due diligence rules (the so-called Omnibus I) and to postpone and adjust the EU Deforestation Regulation (EUDR). For companies, this has brought short-term relief from administrative burdens, but is also a clear signal that the political environment around sustainability rules is becoming less stable.  

On paper, these changes respond to long-standing industry concerns about cumulative compliance costs and overlapping requirements. They have been framed as pragmatic simplification measures rather than an ideological step back from the Green Deal, but the political dynamics behind these outcomes tell a different story – one that matters for how predictable EU sustainability policy will be for the rest of the mandate.  

The Parliament’s attempt to adopt a negotiating position on Omnibus I collapsed in October, despite what looked like a stable agreement between the main centrist groups. When the text returned in November, it passed only because the centre-right European People’s Party (EPP) assembled a new (and politically very different) majority with right-leaning and far-right groups, including the European Conservatives and Reformists (ECR) and the Patriots for Europe group. By contrast, the liberal Renew Europe group and the centre-left Socialists and Democrats (S&D) were internally divided, leaving the coalition that had delivered the Green Deal in the previous mandate too fragmented to carry even a simplification file. For business, the immediate outcome may be lighter reporting obligations, but the longer-term implication is that legislative outcomes now depend far more on shifting parliamentary alliances than on predictable centrist compromises. 

A similar pattern emerged on the EUDR simplification proposal. Once again, cross-party talks among the centrist groups broke down and the EPP turned to support from the right to approve a one-year delay and targeted simplification adjustments. These votes underline a fundamental shift. The EPP now has multiple routes to a majority and is increasingly prepared to use this flexibility to shape the EU’s sustainability agenda. The result is a Parliament where alliances are increasingly fluid and even technical measures have become deeply politicised.  

This shift is already visible beyond Omnibus I and EUDR, with initiatives such as the Commission’s delegated act on taxonomy reporting prompting objections from S&D, the Greens and the Left that would have been unlikely in the previous mandate.  

These dynamics are not confined to secondary or technical legislation and are now feeding into debates on core Green Deal milestones, most notably the 2035 phase-out of internal combustion engine (ICE) vehicles. What was once a settled political milestone has returned to the negotiating table as car-producing Member States grapple with economic uncertainty. Germany now openly advocates revisiting the rules to allow continued sales of hybrid and other combustion-adjacent technologies. France, previously a staunch defender of the 2035 ICE phase-out, has shifted to a position that links any flexibility to strong local-content requirements aimed at strengthening Europe’s industrial base. The new Automotive Package responds to these pressures by easing the full ban and adding flexibilities so combustion engine cars can continue be sold past the specified date.  

This new political dynamic will continue to impact the rest of the mandate. Pieces of legislation that once moved through the Parliament with broad centrist support are now subject to far more unpredictable negotiations. Climate and sustainability laws, in particular, are likely to be influenced by a shifting mix of centre-right, right and occasionally far-right support, depending on the content. For Renew and S&D, this creates a strategic dilemma of whether to hold the political centre by making concessions to keep the EPP on board, or to shift toward a more clearly defined opposition role on high-profile Green Deal files. For companies, this means fewer assumptions can be made about smooth implementation or incremental adjustments. Regulatory relief may be available, but it is now accompanied by a more volatile policy process that may complicate planning and investment decisions. 

Taken together, these developments do not signal a complete abandonment of the Green Deal. The EU’s long-term climate objectives remain intact, and most of the core legislation adopted since 2019 is firmly in place. But the politics surrounding implementation and revision have changed profoundly. Competitiveness, administrative burden and industrial strategy now sit at the centre of the debate, and the emergence of new parliamentary majorities is reshaping how, and how quickly, the Green “Industrial” Deal evolves in the coming years. This means businesses will have to navigate a more fluid and unpredictable environment. Sustainability rules will continue to move forward, but through more fragmented and politically charged negotiations than at any point over the past five years, increasing risks and reducing the possibility of high precision horizon scanning exercises. 

This blog was written by Flint Director Julia Quintella, Manager Pierpaolo Proni and Consultants Margherita Borla Magnetto and Alexander Conway.