In December 2019, the newly appointed President of the European Commission, Ursula von der Leyen, presented what she called Europe's "man on the moon" moment.

The European Green Deal was a commitment to make the European Union climate neutral by 2050 — the first major economy in the world to set such a target in law. It was also, from the beginning, something more than an environmental programme. It was an economic strategy, an industrial policy, and a geopolitical positioning document simultaneously.

Understanding the Green Deal requires understanding all three dimensions — and understanding how the relationships between them have shifted as economic and geopolitical conditions changed.

The Green Deal is not a single piece of legislation. It is a framework — a set of targets and principles that cascades into dozens of specific regulatory proposals, directives, and funding programmes.

The headline commitment is climate neutrality by 2050, with an intermediate target of reducing greenhouse gas emissions by at least 55 percent by 2030 compared to 1990 levels. This target is enshrined in the European Climate Law, which gives it legal force and requires member states to pursue compatible national policies.

The regulatory architecture underneath this target is extensive. The Fit for 55 package — a set of legislative proposals to align EU law with the 55 percent target — covers everything from the EU Emissions Trading System to energy efficiency standards for buildings, from the phaseout of internal combustion engines to the Carbon Border Adjustment Mechanism that imposes a carbon price on imports from countries without equivalent carbon pricing.

The funding architecture is equally significant. The Just Transition Fund addresses the economic costs for regions heavily dependent on coal and carbon-intensive industries. The European Climate Infrastructure and Environment Facility channels investment into clean technology. The Innovation Fund supports the development of low-carbon technologies at commercial scale.

The Green Deal was designed as environmental policy. It became industrial policy when the United States passed the Inflation Reduction Act in August 2022.

The IRA allocated approximately $370 billion in subsidies, tax credits, and support for clean energy and electric vehicles — the largest single climate investment in US history. Crucially, much of this support was conditioned on domestic production. Electric vehicles had to be assembled in North America using North American components to qualify for consumer tax credits. Battery manufacturing facilities had to be located in the US to receive production credits.

European manufacturers and policymakers were alarmed. The subsidy levels were large enough to potentially redirect investment from European clean technology facilities to American ones. Volkswagen, which had committed to major European battery investments, began evaluating whether to shift capacity to the United States. European solar panel manufacturers, already under pressure from Chinese competition, faced a new challenge from subsidised American production.

The European response was the Green Deal Industrial Plan — a rapid reconfiguration of the Green Deal's implementation to include more explicit industrial support. State aid rules were relaxed to allow member states to provide more generous support for strategic industries. The Net Zero Industry Act set targets for European domestic production of key clean technologies. The Critical Raw Materials Act addressed supply chain vulnerabilities for the materials needed in clean technology manufacturing.

The Green Deal had become a geopolitical instrument in a global competition for the clean technology industries of the future.

Climate neutrality target: 2050
2030 emissions reduction target: at least 55% versus 1990 levels
Internal combustion engine phaseout: new car sales from 2035
Carbon Border Adjustment Mechanism: fully operational from 2026
Just Transition Fund: €17.5 billion (2021-2027)
Overall Green Deal investment target: €1 trillion over 10 years (public + private)
EU ETS carbon price: approximately €60-70 per tonne CO₂ (2026)

The Green Deal's central political tension is between its climate ambition and its competitiveness implications.

European industry — particularly energy-intensive sectors like steel, cement, chemicals, and aluminium — faces higher carbon costs than competitors in countries without equivalent carbon pricing. The Carbon Border Adjustment Mechanism addresses this partially, by imposing a carbon cost on imports from countries without comparable pricing. But it covers only a subset of products and does not fully replicate the competitive pressure that European producers face.

The energy price shock following Russia's invasion of Ukraine amplified this tension dramatically. European industrial energy prices rose to multiples of American levels in 2022 and 2023, accelerating a trend of industrial investment shifting to the United States and, to a lesser extent, Asia. Several high-profile European manufacturing investments were redirected or cancelled.

The political response has been to modify the Green Deal's implementation pace without abandoning its targets. The 2030 and 2050 commitments remain in law. But several intermediate regulatory measures have been delayed, softened, or subject to ongoing revision — the pesticide reduction target, aspects of building renovation requirements, and some elements of the farm-to-fork strategy.

The underlying question the Green Deal has not yet resolved is whether the green transition can be achieved without reducing European industrial competitiveness — or whether the transition itself will generate enough new industries and jobs to compensate for what it displaces.

The most common misreading is to treat the Green Deal as primarily an environmental regulation — a set of rules that constrain European industry in ways that create opportunities for less-regulated competitors.

This misses the industrial strategy dimension. European clean technology companies — in offshore wind, heat pumps, grid infrastructure, and increasingly battery technology — have benefited enormously from the regulatory certainty the Green Deal provides. A mandatory phaseout of internal combustion engines by 2035 is a constraint on legacy automakers. It is also a guaranteed market for electric vehicle manufacturers and battery producers who can plan investments with confidence.

The second misreading is to underestimate the Carbon Border Adjustment Mechanism's global implications. As it expands in scope, it will increasingly affect any country exporting carbon-intensive goods to Europe — including the United States. The Green Deal is not just European regulation. It is European regulation with global reach.

The European Green Deal is simultaneously the world's most ambitious climate commitment and the most consequential industrial policy Europe has attempted since the creation of the single market.

Friday's EuroTasteDaily Review examines what the Green Deal actually means for businesses operating in and with Europe — who is winning the green transition, who is paying for it, and what the global implications of Europe's carbon border mechanism look like from the outside.