Five Years of the EU Green Deal: What’s Working, What’s Falling Short, and What Comes Next

When the European Commission launched the EU Green Deal in late 2019, it promised nothing less than a transformation of Europe’s economy — making the continent climate-neutral by 2050 while keeping growth and competitiveness intact. Five years in, the picture is one of genuine achievements shadowed by stubborn fault lines. A February 2026 review by A&O Shearman offers one of the most comprehensive assessments yet of where European climate policy stands — and what the next chapter must look like.

Carbon Markets and Clean Tech: The Green Deal’s Strongest Cards

The most tangible wins of the past five years lie in the architecture of carbon markets and industrial investment. The reformed EU Emissions Trading System (ETS) has tightened its caps significantly and — in a major expansion — now extends to the buildings and transport sectors, two of Europe’s most stubborn sources of emissions. The result: over €200 billion generated for green funds, channelled into clean energy, infrastructure, and just transition programmes across Member States.

Alongside ETS reform, the Carbon Border Adjustment Mechanism (CBAM) is advancing toward full operation by 2026. By placing a carbon price on imports from countries with weaker climate standards, CBAM is already reshaping global supply chains — pressuring steel, cement, aluminium, and fertiliser producers worldwide to decarbonise or face higher costs when selling into the European market. It is, in effect, the EU exporting its environmental regulation logic beyond its own borders.

On the industrial side, the Net-Zero Industry Act and the Critical Raw Materials Act are providing frameworks to scale clean technology manufacturing inside Europe — a strategic response to competition from the US Inflation Reduction Act and China’s state-backed green industries.

The Simplification Gamble: Cutting Red Tape Without Cutting Ambition

One of the most politically charged developments of recent months is the so-called Omnibus simplification package — a reform effort designed to reduce the regulatory complexity that businesses, particularly SMEs, have struggled with. Sustainability reporting requirements, supply chain due diligence rules, and taxonomy obligations are being streamlined, with the Commission arguing this recalibration is necessary to maintain competitiveness during a period of slow economic growth and shifting political winds.

Critics worry that simplification is a euphemism for dilution. Proponents counter that unworkable rules produce poor compliance — and that a leaner framework, if properly enforced, can deliver the same climate outcomes. The debate reflects a broader tension inside the EU: how to maintain the 55% greenhouse gas reduction target by 2030 and the more ambitious 90% cut by 2040 while keeping European industry globally competitive.

Where the Green Deal Is Falling Short: NECPs and Global Equity

The most uncomfortable finding in the current assessment concerns National Energy and Climate Plans (NECPs). Aggregated projections from Member States point to only a 51% GHG reduction by 2030 — four percentage points short of the legally binding 55% target. This is not a rounding error; it represents a significant enforcement gap that requires urgent national revisions if the EU is to remain credible on the international stage and aligned with the 1.5°C Paris Agreement goal.

For citizens, the implications are direct: a slower transition may ultimately mean higher long-term energy costs and greater exposure to climate impacts, while a faster but poorly managed one risks energy poverty and social disruption. The just transition dimension cannot be an afterthought.

There is also a growing concern around the EU’s Carbon Dioxide Removal (CDR) strategy. Plans to offset residual emissions through land-based carbon sinks raise serious questions about land-use pressures in the Global South — particularly in countries like Brazil. Offsets that displace communities or convert biodiverse ecosystems to carbon plantations are not a climate solution; they are a transfer of harm. Equitable CDR frameworks that genuinely protect local communities must be part of any credible EU climate architecture.

What This Means for Businesses, Citizens, and Policymakers

The Green Deal at five is neither a failure nor a finished project. It has built real infrastructure — financial, regulatory, and institutional — for Europe’s low-carbon transition. But the gap between ambition and delivery is widening in critical areas. Key implications include:

• Businesses face tighter carbon pricing through ETS expansion and must adapt supply chains to CBAM compliance — but may benefit from simplified sustainability reporting obligations under the Omnibus reforms.
• Citizens should expect energy transition costs to remain a live political issue, with the pace of NECP revisions determining how equitably those costs are distributed.
• Policymakers must close the NECP gap urgently, enforce CDR equity standards, and resist the temptation to let simplification become a cover for lowering the bar on environmental regulation.

The key takeaway: the EU Green Deal’s first five years have laid a credible foundation for Europe’s climate transition — but the next five will determine whether that foundation holds. Closing the emissions gap, ensuring global fairness, and keeping businesses and citizens on board are not competing goals. They are the only path to a Green Deal that actually delivers.