SURFING THE RED WAVE — As President Donald Trump moves to erase all traces of U.S. climate policy through a tsunami of executive orders, Republicans and business groups are hoping to ride the wave across the Atlantic to stymie Brussels’ green agenda, your host reports with Marianne Gros. Trump’s GOP trifecta in Washington is emboldening allies who want to drive the European Union away from far-reaching climate laws that they say threaten competitiveness and impose undue costs on U.S. companies. While the Biden administration expressed some concern about the extraterritorial impact of the European rules, the dawn of Republican dominance is adding fuel to the fight as Trump vows to reshape relations with allies and rivals alike.
“Donald Trump is America first. And if there is any example of a foreign regulation that puts America last, it's the EU's [climate agenda],” said Rep. Andy Barr (R-Ky.), a House Financial Services Committee member who met with European officials late last year to discuss Brussels’ “regulation factory.” “An America first agenda will animate ferocious opposition to a European Union that attempts to impose their costly, burdensome regulations on American firms,” he added.
New EU rules compelling corporations to report on their environmental footprint and exposure to climate risk and a law mandating that they identify and root out environmental and social harms in their supply chains both require compliance by large companies that do business in Europe, including U.S.-based businesses. The goal is to crack down on companies’ contribution to planet-warming pollution by handing regulators, investors and consumers critical data to promote peer-to-peer competition among businesses to green their operations.
Facing questions about the rules' impact on the bloc’s economy and competitiveness, the European Commission announced in November that it would reopen the laws to simplify them. While it’s not yet clear whether the effort will simply be a streamlining of the laws or a broader rollback like the push to weaken anti-deforestation rules, U.S.-based officials and companies see it as an opportunity to lobby Brussels to ensure the changes are beneficial to them. The U.S. Chamber of Commerce is leading the charge, warning Congress last month that “the EU is imposing undue regulatory measures that have a direct impact on the competitiveness of American firms” with its due diligence program and asking U.S. policymakers to “engage directly with counterparts in Brussels.” The Chamber is also leading court cases against a U.S. Securities and Exchange Commission disclosure rule that is all but dead and the landmark reporting program enacted by California, where regulators have announced a one-year delay of enforcement. “There’s a window of opportunity here to get to rational policy developments in Brussels,” said Tom Quaadman, executive vice president of the Chamber’s Center for Capital Markets Competitiveness. On the flip side, Europe still has its climate-minded constituencies to placate after bitter legislative fights to enact the laws in the first place. “We are really concerned about a bigger revamp,” said Manon Dufour, executive director of global climate think tank E3G’s Brussels bureau. Barr doesn’t think European officials are getting the memo about how the rules will make the bloc less competitive. But competitiveness cuts both ways, said Emily Pierce, who previously worked in the SEC’s Office of International Affairs and is currently a policy officer at carbon accounting firm Persefoni. While Europe’s introspection opens a window for the new U.S. administration to advocate for reducing the requirements, dropping all requirements for foreign companies isn’t necessarily in its best interest, Pierce said, adding that it could instead provide “an opportunity to find more pragmatic cross-border approaches.”
“Europe applies these rules to non-EU companies to level the playing field,” Pierce said. “The current pressure is about European competitiveness, and dropping the extraterritorial application would not advance that agenda. It would actually harm it."
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