The EU is expected to repeal a raft of environmental regulations on Wednesday as it begins a deregulation drive to keep pace with the United States and China. European Union to focus on boosting competitiveness in response to concerns about slow economic growth, significantly departing from the original mandate of EU predecessor Ursula von der Leyen, which focused on combating climate change.

The issue has taken on a new urgency as US President Donald Trump pushes for an America First policy, raising the risk of a trade war with the EU. Disgruntled businesses, along with key member states such as France and Germany, are pressuring Brussels to make it easier to do business and reduce energy costs, which are higher than in the US. In response to these concerns, the European Commission is preparing a package of proposals, some of which, documents obtained by AFP, suggest adjusting environmental standards, reducing energy costs and supporting the clean technology sector. The proposals will need the approval of EU member states and the European Parliament.

The new rules on environmental and human rights in supply chains, which were enthusiastically adopted a few months ago, are now proving too burdensome for businesses. “The geopolitical context is becoming increasingly tense and we cannot expect our companies to make massive investments in resource reporting if they are to operate in a war economy and decarbonise at the same time,” explained EU industry chief Stephane Sejourne.

The EU is currently working on two major directives: the Corporate Sustainability Reporting Directive (CSRD), which requires large companies to provide information on their climate impact and emissions to investors and other stakeholders, and the Corporate Sustainability Due Diligence Directive (CSDDD), approved last year, which requires large companies to address adverse human rights and environmental impacts in global supply chains. The EU proposal proposes that companies report on their supply chains every five years instead of annually, which would significantly reduce the administrative burden. The proposal also stipulates that the obligation will apply to larger companies with more than 1,000 employees, while the current rules apply to companies with more than 250 employees and a turnover of more than €40 million.

The changes will be hotly debated in the European Parliament, where centrist, left-wing and Green MEPs are opposed to weakening environmental rules, although some liberals are open to some adjustments. French centrist Marie-Pierre Vedrenne, who previously voted in favour of them, called the rules a “mistake” and stressed the need to acknowledge that the European Parliament sometimes makes mistakes.

The parliamentary socialist movement has called on Brussels to “rethink” its approach, while climate groups have warned against watering down the rules, arguing that it would harm companies that have committed to sustainability and invested in legislative requirements. Amandine Van Den Berghe of ClientEarth has warned that a change of course could lead to a failure in global competition.

But Brussels is building on its commitment to achieving environmental targets and climate neutrality by 2050. As part of the reduction of red tape, the EU will present its “clean industrial deal” on Wednesday, which combines measures to boost the green technology sector and lower energy prices. European Energy Commissioner Dan Jorgensen stressed that even as the US deviates from the green agenda, Europe has an opportunity to make another step forward. However, the business sector in Brussels privately expresses concerns that measures to reduce energy costs could come too late, with Brussels apparently planning to reform state aid rules and shorten permitting deadlines for renewable energy projects by the end of 2025. Spring