The European Union has introduced The European Green Deal (EU Green Deal EGD) as yours the path to achieving decarbonization, zero pollution, nature conservation and resource efficiencyEGD is complex a policy framework with numerous legislative acts, strategies and financial instruments aimed at to transform Europe's economy and society, place sustainability at the heart of EU policies and unite all sectors to achieve climate neutrality by 2050This ambitious goal is also enshrined in the European Climate Law of 2021.

The introduction of EGD was stimulated by several factors. These included: EU international obligations, notably in the framework of the Paris Agreement, which needed to be translated into concrete legislation. At the same time, the European Commission understands decarbonization and green innovation as a driver of economic development. An important factor was also strong demand for stricter climate measures, expressed by movements such as Fridays for Future and the Global Climate Strike, as well as broad public support for stronger environmental protection. Even after the outbreak of the Covid-19 pandemic in 2020 and the Russian invasion of Ukraine in 2022, which caused economic challenges and disruptions to supply chains, the European Commission decided to stick with the EGD, arguing that The transition to sustainability will increase the resilience of the EU and its economy.

EGD covers eight political areas, including the goal of climate neutrality by 2050, clean energy, circular economy, sustainable construction, toxic-free environments, nature protection and restoration, sustainable food systems and sustainable mobility. These areas are supported by mechanisms to finance the transformation, ensure a just transition and support research and innovation.

Several elements of EGD have direct or indirect impact on industrial sectors outside the EU, including Asia and the Pacific, as new rules and standards have been introduced for products and services sold on the EU market. For example:

• In the area of climate and energy, the package Fit for 55 It aims to meet the target of reducing emissions by 55% by 2030 and includes a revision of the EU Emissions Trading System (ETS), which now covers more sectors. Carbon Boundary Mechanism (CBAM) introduces a carbon tax on imports of goods from carbon-intensive sectors in order to create a level playing field, which will be directly applicable to manufacturers in Asia-PacificThe Renewable Energy Directive (RED III) and REPowerEU have increased the target for renewable energy.
• IN circular economy introduced an action plan with targets for sectors important for EU-Asia trade, such as electronics, batteries, packaging and textiles. The initiative Sustainable products extended the Ecodesign Directive and introduced requirements for durability, reparability and recyclability, as well as Digital product passport for transparency. Legislation on Just for repair facilitates repairs and reduces planned obsolescence. The revision of the Waste Shipment Regulation introduced new rules for waste transport from the EU to other countries, including Asia and the Pacific, regarding plastic waste and WEEE.
• In the area zero pollution, the Chemicals Strategy for Sustainability calls for a revision of the REACH Regulation, introducing stricter rules for hazardous chemicalsThe REACH Regulation applies to all chemical substances and products placed on the EU market, regardless of where they are manufactured, thus will directly affect products from Asia intended for export to the EU.
• Regarding deforestation and agriculture, the EU Deforestation Regulation (EUDR) prohibits the import and sale of specific products if they are linked to deforestation. It applies to commodities such as beef, cocoa, coffee, palm oil, rubber, soy and timber. Companies importing these products into the EU they must exercise due diligenceto ensure compliance with the regulation. Although it was received with criticism and its implementation was delayed, the EUDR requires that manufacturers in Asia have demonstrated that their products were not linked to deforestation after 2020.
• The Sustainable Finance Strategy (Sustainable Finance Taxonomy) provides clear criteria for identifying sustainable economic activities, which is relevant for global companies and financial institutions that want to comply with EU standards or attract capital from the EU.

The impact of these policies on stakeholders in Asia is significant. Manufacturers and exporters in Asia-Pacific will have to adapt to adapt to European standardsto gain access to the EU market. This may mean significant costs and the need invest in research and developmentAt the same time, however, it can trigger innovations and changes in product design in countries that want to export to the EU.

Experts emphasize that Dialogue and cooperation are keyIt is important that EU policymakers fully understand the impact of the new regulations on producers in third countries, especially small producers. It is also proposed that taxes levied by the EU, for example through CBAM, should be reinvested to support decarbonization in fragile emerging economies.

The EGD is the most ambitious global policy framework to decarbonise the entire region and achieve comprehensive environmental goals. Given the close trade links between the EU and the Asia-Pacific region, many of these new policies have direct and indirect impact on various sectors and stakeholders and in Asia. While the requirements to comply with EU standards pose challenges, accelerating decarbonisation, detoxification and the circular economy are also creates new opportunities for businesses and industries in these interconnected regions. Spring

European Green Deal – Knowledge Brief

Glossary of key terms

• European Green Deal (EGD): The EU policy framework and roadmap to achieve decarbonisation, zero pollution, nature protection and resource efficiency.
• Climate neutrality: Achieving net zero greenhouse gas emissions, meaning any residual emissions are offset. The EU aims to achieve this by 2050.
• "Fit for 55" package: A set of legislative proposals to align EU policies with the aim of reducing net greenhouse gas emissions by at least 55 % by 2030.
• EU Emissions Trading System (ETS): A market mechanism for capping and trading greenhouse gas emission permits that sets a maximum amount of emissions.
• Carbon Border Adjustment Mechanism (CBAM): A carbon tax on imported goods to equalise the carbon cost between EU domestic products and imports and prevent carbon leakage.
• Circular Economy Action Plan (CEAP): An initiative that aims to promote more sustainable use of resources by reducing waste, increasing product lifespan, and promoting reusability and recyclability.
• EU Deforestation Regulation (EUDR): Regulation banning the import and sale of certain products in the EU if they are linked to deforestation or forest degradation after December 2020.
• Due diligence (in the context of EUDR): Obligation for companies to collect information and carry out risk assessments to ensure that products imported into the EU are not linked to deforestation.
• Farm to Table (F2F) Strategy: An initiative aimed at transitioning to a sustainable food system in the EU, focusing on organic farming, reducing pesticides and tackling food waste.
• Taxonomy of sustainable finance: An EU classification system to identify environmentally sustainable economic activities in order to guide investment towards green projects.