Five Years of the EU Green Deal: What Has Changed, What Is Stalling, and What Comes Next

When the European Commission launched the EU Green Deal in December 2019, it was billed as Europe’s “man on the moon moment” — an ambitious roadmap to make the continent climate-neutral by 2050. Five years later, as a February 2026 review by A&O Shearman makes clear, the picture is one of genuine achievement shadowed by serious fault lines. The question now is not whether the Green Deal survives, but how it evolves to stay credible in a more turbulent world.

What Five Years Have Delivered

The headline numbers are encouraging. EU greenhouse gas emissions have continued their downward trajectory, clean technology investment has scaled significantly across member states, and landmark legislative packages have moved from proposal to law. The “Fit for 55” package — designed to cut net emissions by at least 55% by 2030 compared to 1990 levels — is largely in place, with the revision of the Energy Taxation Directive among the remaining pieces being finalised to better incentivise renewables and penalise fossil fuels.

Perhaps the most structurally significant milestone is the Carbon Border Adjustment Mechanism (CBAM), set to be fully operational by 2026. By placing a carbon price on imports from countries with weaker climate policy, CBAM is designed to prevent carbon leakage and level the playing field for European industry. Revenues from an expanded EU Emissions Trading System (EU ETS) are projected to generate over €200 billion for green transition funds — a substantial injection into the clean economy. Internationally, CBAM is already reshaping conversations: trading partners from India to Brazil are recalibrating their own carbon markets and production standards in response.

Where the Cracks Are Showing

Yet the review is candid about the pressures bearing down on the Green Deal. Economic slowdowns across major EU economies, the aftershocks of energy price volatility triggered by geopolitical instability, and a more fragmented political landscape following the 2024 European Parliament elections have all complicated implementation. Businesses and investors have repeatedly flagged a core concern: regulatory unpredictability.

The proliferation of sustainability reporting obligations — from the Corporate Sustainability Reporting Directive (CSRD) to the EU Taxonomy — has created a compliance burden that smaller companies in particular struggle to absorb. There is now a strong institutional push to simplify and stabilise the rulebook, providing clearer, more predictable timelines so that capital can flow with confidence rather than hesitation. Simplification, in this context, does not mean retreat — it means making environmental regulation workable at scale.

Meanwhile, calls are growing louder for the EU to set a 90% greenhouse gas reduction target for 2040, a step that would anchor long-term industrial planning and send a durable signal to global markets. Awareness campaigns on escalating climate risks are also being proposed to rebuild public and political consensus around the Green Deal as a top-tier priority — not a luxury to be deferred when growth slows.

Green Industrial Competitiveness: The New Frontier

One of the most significant shifts in the Green Deal’s second chapter is the explicit link between climate policy and industrial strategy. Instruments like the Net-Zero Industry Act and the Critical Raw Materials Act reflect a hard-won lesson: the energy transition cannot be outsourced. Europe needs domestic manufacturing capacity in solar, wind, batteries, and the minerals that underpin them — or risk trading dependence on Russian gas for dependence on Chinese supply chains.

This reframing — green not just as an environmental imperative but as an economic and strategic one — is arguably the most important development in EU sustainability policy since the Green Deal’s launch. It also opens the door to broader coalitions: industries that once viewed environmental regulation as a constraint are increasingly seeing clean tech as a competitive opportunity.

Implications for Businesses and Citizens

• Investors can expect a more stable regulatory environment as the EU prioritises consolidating existing rules over introducing new ones — improving long-term planning horizons for green portfolios.
• Companies subject to sustainability reporting obligations should prepare for streamlined but still demanding disclosure requirements; the direction of travel on transparency is irreversible.
• Global exporters to the EU must factor CBAM compliance into their cost structures and supply chain strategies well ahead of full operationalisation.
• Citizens will feel the Green Deal most directly through energy bills, building renovation incentives, and the quality of public transport — areas where member state implementation varies widely.

Key Takeaway

The EU Green Deal at five is neither the unqualified success its architects hoped for nor the regulatory overreach its critics claim. It is, more accurately, a living framework under stress — being tested by economic headwinds, geopolitical shocks, and political realignment, but also being adapted in response. The next chapter will be defined by a difficult balance: maintaining ambition on carbon markets and emission targets while making the system legible and investable for the businesses and citizens who must ultimately deliver the transition. Europe’s ability to strike that balance will matter far beyond its own borders.