We are living through a period of considerable geopolitical and economic uncertainty. Global trade is becoming increasingly protectionist, while concerns over security, defence and strategic self-sufficiency are playing a much greater role in policymaking.
These circumstances are very different from those that shaped the liberalisation of international trade following the Second World War and which, until relatively recently, largely determined the direction of global economic policy.
Against this background, EU environmental legislation needs to be considered not only in terms of its stated environmental objectives, but also in the context of the practical, economic and strategic constraints within which those objectives must be achieved.
A good example is the recent Regulation (EU) 2026/667 of 11 March 2026, amending Regulation (EU) 2021/1119 (the European Climate Law) in relation to the establishment of an interim EU climate target for 2040.
The Regulation contains a range of measures intended to achieve, by 2040, a 90% reduction in greenhouse gas emissions compared with 1990 levels.
However, Article 2 contains a measure which, at least in the short term, appears to run counter to that objective. Despite its significance, the provision receives comparatively little attention within the Regulation.
Article 2 postpones until 2028 the implementation of the emissions trading system for buildings, road transport and certain other sectors, which had originally been due to apply from 2027 under Chapter IVa of Directive 2003/87.
At first sight, a one-year postponement may not appear particularly significant. However, the underlying rules affect the release for consumption of fuels used in these sectors and therefore supplies made for those purposes outside a duty-suspension arrangement by an “authorised warehousekeeper”, as defined in Article 3(1) of Directive 2020/262 governing the general arrangements for excise duty.
The strategic importance of transport and energy
When Directive 2003/87 was extended to these additional sectors, the conflict between Russia and Ukraine was already well under way.
Potential shortages and increases in the prices of petroleum-derived energy products were therefore foreseeable. Article 30k consequently provided a mechanism under which implementation of the new scheme could be postponed until 2028 if the specified circumstances arose.
Nevertheless, the result is significant.
Transport is one of the EU's major sources of greenhouse gas emissions, yet the sector is temporarily being protected from some of the additional obligations being imposed elsewhere in the economy to achieve reductions in those emissions.
One important reason is the strategic nature of transport. The same is true of the energy sector, with both becoming increasingly important as the EU seeks to strengthen its resilience and strategic self-sufficiency.
Indeed, both energy and transport are identified as sectors of high criticality in Annex I to Directive (EU) 2022/2555 of 14 December 2022 on measures for a high common level of cybersecurity across the Union.
This illustrates one of the fundamental constraints on EU environmental policy: environmental objectives cannot always be pursued in isolation from considerations of energy security, transport resilience and wider strategic interests.
Fluorinated greenhouse gases: another balancing exercise
Another example of the balance between environmental ambition and strategic necessity can be found in the exemptions from certain prohibitions established by Article 11 of Regulation (EU) 2024/573 of 7 February 2024 on fluorinated greenhouse gases.
The Regulation emphasises the environmental harm caused by fluorinated greenhouse gases (F-gases).
These are man-made chemicals which can have an extremely powerful greenhouse effect—often several thousand times greater than carbon dioxide. Alongside carbon dioxide, methane and nitrous oxide, they form part of the greenhouse gas emissions covered by the Paris Agreement.
The Regulation notes that F-gas emissions account for approximately 2.5% of total greenhouse gas emissions in the EU and that, unlike other greenhouse gas emissions, they doubled between 1990 and 2014.
The legislation therefore introduces significant restrictions intended progressively to reduce their use.
In relation to imports, broadly speaking, the Regulation adopts two approaches. The first is a quota system, restricting the quantity of certain gases that may be placed on the EU market. The second is more stringent and involves outright prohibitions on the placing on the market of specified products and equipment.
However, even these prohibitions are not absolute.
Exemptions where alternatives are not practical
Article 11(5) provides an important exemption mechanism.
Following a substantiated request from the competent authority of a Member State, the European Commission may exceptionally authorise an exemption for up to four years allowing products and equipment listed in Annex IV to be placed on the market.
An exemption may be granted where it can be demonstrated that:
(a) alternatives are unavailable or cannot be used for technical or safety reasons; or
(b) the use of technically feasible and safe alternatives would result in disproportionate costs.
The provision therefore expressly recognises that environmental restrictions may need to give way where suitable alternatives do not yet exist or where compliance would impose disproportionate economic costs.
This becomes particularly important where the affected products are required by industries regarded as strategically important to the EU.
The semiconductor industry
A particularly interesting example concerns the electronics and semiconductor industry, another sector identified as highly critical under Directive (EU) 2022/2555.
German authorities submitted a request to the Commission seeking an exemption for two types of stationary chillers used in semiconductor manufacturing, which would otherwise be prohibited from being placed on the market from 1 January 2027.
The justification illustrates the practical difficulties involved in implementing ambitious environmental legislation in strategically important industries.
Despite sustained investment in alternatives—including CO₂-based technologies and other refrigerants with a lower global warming potential—Germany argued that no available alternative could currently satisfy the full range of temperature, safety and performance requirements across all semiconductor applications.
The request also argued that, because of the technical, regulatory and economic constraints facing the industry, completing the transition by the statutory deadline would not be feasible without risking operational continuity and imposing disproportionate costs.
These considerations are particularly significant because semiconductor manufacturing is a strategically critical industry for the EU.
Semiconductor and integrated-circuit manufacturing plants require substantial investment in highly specialised machinery and equipment. Precise control of temperature and humidity is essential throughout the manufacturing process, including to minimise the risks associated with static electricity.
The stationary chillers concerned are therefore not peripheral equipment.
As the legislation granting the exemption explains, the relevant equipment consists of stationary chillers with a cooling capacity below 12 kW which currently depend upon fluorinated greenhouse gases. These chillers are integral to many semiconductor manufacturing facilities and are essential for controlling the temperature of wafers and critical equipment during production.
The environmental restriction therefore comes into direct contact with another EU policy objective: maintaining and strengthening Europe's semiconductor manufacturing capability.
It is also notable that the exemption was requested by Germany, home to one of Europe's major semiconductor industries, including Infineon, which is headquartered in Munich.
Environmental ambition versus strategic reality
These examples demonstrate an important feature of EU environmental policy.
The Union continues to establish ambitious targets for reducing greenhouse gas emissions and restricting the use of environmentally harmful products. However, those objectives increasingly operate alongside other priorities which have become more important in the present geopolitical environment.
Energy security, transport resilience, semiconductor production and strategic self-sufficiency cannot simply be disregarded in pursuit of environmental targets.
The postponement of emissions trading for buildings and road transport and the availability of exemptions from the F-gas prohibitions demonstrate how these competing objectives are reconciled in practice.
This does not necessarily mean that the EU is abandoning its environmental objectives. Rather, it demonstrates the practical limits within which environmental policy has to operate.
Where an environmental measure risks disrupting a strategically important industry, creating unacceptable security-of-supply risks or imposing disproportionate costs in circumstances where viable alternatives are not yet available, EU legislation itself increasingly provides mechanisms for delay, derogation or exemption.
The challenge for the EU is therefore not simply to establish ambitious environmental targets, but to achieve them without undermining the economic and strategic resilience on which the Union increasingly depends.
