Climate and Energy: EU Policy and Regulation Update for 29 October 2025
October 29, 2025
As policy and regulatory landscapes evolve, this publication will provide insights to navigating emerging risks and opportunities in the energy transition. Read previous issues here.
Sustainability Omnibus Package
- Omnibus Package amendments to the EU carbon leakage instrument under CBAM published in EU Official Journal
- EU Parliament rejects the Sustainability Omnibus mandate adopted by the JURI committee
- Joint Committee of the ESAs publishes 2026 Work Programme
- Commission publishes 2026 Work Program, emphasizes sustainable prosperity and competitiveness
- U.S. and Qatar send letter to EU Heads of State, asking for CSDDD’s repeal or reframe
- ESMA publishes annual market report on EU Carbon markets, acknowledging smooth functioning
- Federal Government adopts a draft legislation extending the exemption from the motor vehicle tax for electric cars until 2035
- Federal Court of Justice admits an appeal against a dismissal of a lawsuit seeking Mercedes Benz to stop selling cars with combustion engines as of 2030
- Residents of Hamburg approve a draft legislation in a referendum requiring climate neutrality in Hamburg by 2040
- Federal Government adopts an action plan to promote the usage of fusion energy in Germany in the future
- Banque de France holds seminar on Sustainable Investing for Public Investors
- Paris Judicial Court rules on greenwashing allegations against TotalEnergies
- The Italian Government published a draft Legislative Decree to implement the Basel Framework including on ESG risks
- New guidance for the board of statutory auditors of Italian listed companies on ESG supervision
Sustainability Omnibus Package
17 October 2025 [EU] – Omnibus Package amendments to the EU carbon leakage instrument under CBAM published in EU Official Journal
Regulation (EU) 2025/2083 amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism (CBAM) was published in the Official Journal of the European Union [full text available here].
These amendments, part of the Omnibus I simplification package, establish a new de minimis mass threshold whereby imports up to 50 tons per importer per year will not be subject to CBAM rules – thus exempting 90% of SMEs and individuals importing only small quantities of goods covered by CBAM.
For imports still subject to CBAM, the rules have been streamlined regarding the authorization process, emissions calculation methodology, verification procedures, and financial liability requirements for authorized CBAM declarants.
The new regulation entered into force on 20 October 2025 and is directly applicable in all EU Member States.
22 October 2025 [EU] – EU Parliament rejects the Sustainability Omnibus mandate adopted by the JURI committee
The EU Parliament rejected the mandate adopted by the Committee on Legal Affairs (JURI) on the Sustainability Omnibus compromise, by 309 votes in favour, 318 against and with 34 abstentions [press release available here].
On 13 October 2025, the JURI Committee had adopted amendments to the Omnibus package, [full amendments available here] but had also voted in favour of entering trilogue negotiations directly, setting aside the need for a plenary vote.
With the EU Parliament’s rejection, MEPs will need to vote on new amendments to the file at the next plenary session on 13 November 2025. This could mean changes to the current Omnibus compromise, and will warrant new talks with EU governments post-plenary session.
The EU Parliament President, Roberta Metsola, and the Omnibus Rapporteur, Jörgen Warborn, held a press conference shortly thereafter [full video available here]. Metsola noted that the vote showed that “for a huge section of the Parliament, this compromise simply did not go far enough, and for some sections, it went too far”. EPP Rapporteur Jörgen noted ‘that “It is disappointing when that agreement does not hold”.
European Union/International
16 October 2025 [EU/International] – Joint Committee of the ESAs publishes 2026 Work Programme
The Joint Committee of the European Supervisory Authorities (ESAs) has published its 2026 Work Programme [available here], outlining the following key priorities: digital operational resilience, consumer protection and financial innovation, sustainable finance, risk assessment, securitisation, financial conglomerates, the European Forum for Innovation Facilitators, and external credit assessment institutions. In the area of sustainable finance specifically, the ESAs will continue to monitor the implementation of existing obligations under the Sustainable Finance Disclosure Regulation (SFDR – Regulation (EU) 2019/2088) to promote supervisory convergence and provide further guidance to competent authorities and market participants on its practical application. They will also prepare for future empowerments or mandates under a revised SFDR framework. Additionally, the ESAs are expected to release Guidelines on high-level principles to carry out ESG stress testing, as mandated by the CRD 6 and Solvency II.
21 October 2025 [EU] – Commission publishes 2026 Work Programme, emphasizes sustainable prosperity and competitiveness
The European Commission has published its 2025 Work Programme, targeting in particular sustainable prosperity and competitiveness as central priorities for the coming year [full work program available here].
The Commission considers that Europe must address structural barriers to competitiveness by accelerating implementation of the Draghi Report, building on its social market economy model. The program outlines sector-specific support measures, such as support for small affordable cars, battery manufacturing, and social leasing schemes for zero-emission vehicles.
The Commission commits to strengthening the Single Market by 2028 through removal of barriers in capital, energy, services, and telecoms, alongside establishing what it terms a “fifth freedom” for knowledge and innovation via the European Research Area.
To address supply chain concerns, the program proposes establishing a Critical Raw Materials Centre to monitor, jointly purchase, and stockpile minerals essential for clean tech, digital, automotive, space, and defence sectors. On clean technology, the program includes a Circular Economy Act to foster demand for circular products and reduce resource dependencies, alongside enhanced public procurement frameworks.
22 October 2025 [International] – U.S. and Qatar send letter to EU Heads of State, asking for CSDDD’s repeal or reframe
The U.S. Department of Energy and Qatari Minister of State for Energy Affairs sent a letter to the Heads of State of the EU Member States [full letter available here], noting that implementation of Directive 2024/1760 on corporate sustainability due diligence (the CSDDD) could jeopardize compliance with recent trade agreements.
The letter first acknowledges U.S. and Qatar’s “deep commitment to supporting the EU’s prosperity and stability”, before setting out their “deep concern over the continued lack of action to address the universally acknowledged, serious, and legitimate concerns raised by the global business community” on the CSDDD.
The letter urges the EU and its Member States to act swiftly to either repeal the CSDDD in its entirety or remove parts of its provisions, i.e., Article 2 (extraterritorial application, Article 22 (transition plans for climate change mitigation), Article 27 on penalties or Article 29 on civil liability of companies.
3 October 2025 [EU] – EFRAG updates VSME Digital Template with Multi-Language Support
EFRAG released an updated version of its VSME Digital Template for SME sustainability reporting, now featuring multi-language support [see here] . The tool, aligned with the European Commission’s VSME Recommendation, enables report generation in Spanish, Polish, Lithuanian, and Portuguese, alongside English. Additional translations from other EU countries are expected by November 2025.
22 October 2025 [EU] – ESMA publishes annual market report on EU Carbon markets, showing smooth functioning
The European Securities and Markets Authority (ESMA) has published its second market report on EU carbon markets, as part of its monitoring mandates under Directive (EU) 2023/958 (the EU Emissions Trading System Directive) [full report available here].
ESMA notes that it has not identified any significant issue in the integrity or transparency of EU carbon markets. Auctions and trading dynamics of EU emission allowances remain largely unchanged. However, the absence of standardised identifiers for ETS account holders remains a key challenge, leading ESMA to recommend the adoption of Legal Entity Identifiers (LEIs) within the Union Registry, which would facilitate future EU ETS monitoring.
Germany
15 October 2025 [Germany] – Federal Government adopts a draft legislation extending the exemption from the motor vehicle tax for electric cars until 2035
On 15 October 2025, the Federal Government adopted a draft legislation to amend the Motor Vehicle Tax Act, which, amongst other things, extends the exemption from the motor vehicle tax for electric cars until 2035.
This extension is intended to provide a targeted incentive for the purchase of electric cars, in order to promote climate-neutral mobility as well as strengthen the automotive industry in Germany [see further here, German only].
13 October 2025 [Germany] – Federal Court of Justice admits an appeal against a dismissal of a lawsuit seeking Mercedes Benz to stop selling cars with combustion engines as of 2030
On 13 October 2025, the Federal Court of Justice admitted an appeal by Environmental Action Germany (‘Deutsche Umwelthilfe’), a German NGO that campaigns for environmental protection, against a ruling by the Higher Regional Court Stuttgart dismissing its complaint against the car manufacturer Mercedes Benz.
The aim of the lawsuit is to order Mercedes Benz to stop selling cars with combustion engines as of 2030. To support the claim, Environmental Action Germany is arguing, amongst other things, that companies must also comply with the fundamental rights in the German constitution that convey a right to climate protection and the obligations arising from the Paris Agreement to reduce CO2-emissions. The lawsuit has been dismissed by the lower courts. Due to the admission of the appeal, the Federal Court of Justice will now deal with the lawsuit and the underlying legal issues in the near future on the merits [see further here, German only].
12 October 2025 [Germany] – Residents of Hamburg approve a draft legislation in a referendum requiring climate neutrality in Hamburg by 2040
On 12 October 2025, the residents of the German city Hamburg approved in a referendum a draft legislation that requires the city to achieve climate neutrality by 2040, five years earlier than the Federal Climate Action Act stipulates for Germany as a whole.
In order to achieve climate neutrality, the draft law provides for annual limits for CO2-emissions as well as specific development targets for individual sectors such as transport, industry and private households. It therefore differs from the current version of the German Climate Change Act, where specific sector targets were abolished on July 16, 2024 [see here, German only]. The Mayor of Hamburg already assured the implementation of the result of the referendum [see further here, German only].
1 October 2025 [Germany] – Federal Government adopts an action plan to promote the usage of fusion energy in Germany in the future
On 1 October 2025, the Federal Government adopted an action plan aimed at promoting the use of fusion energy including the construction of a fusion power plant in Germany.
The action plan contains a variety of measures to improve the framework conditions for the research and use of fusion energy. One main pillar of the action plan is the promotion of research regarding fusion energy entailing investments in this field of over EUR 2 billion until 2029 [see further here, German only].
France
22 October 2025 [France] – Banque de France holds seminar on Sustainable Investing for Public Investors
The French central bank, Banque de France, in cooperation with the World Bank, held a seminar in Paris on “Sustainable Investing for Public Investors”. The keynote address was given by Agnès Bénassy-Quéré, second deputy governor of the Banque de France [full speech available here, in English].
Bénassy-Quéré emphasized that the ACPR considered climate change as a risk to price stability and financial stability, and was pushing for credible standards and reporting practices for the financial sector at large, to protect it against systemic risks arising from climate change and from the transition.
In particular, Bénassy-Quéré outlined that “the recent Omnibus proposal includes welcome simplifications, but they must not alter the high ambition level for the sustainable reporting framework. Criticisms have been made regarding the over-complexity of the initial reporting rules, and now a trend of simplification has started. However, simplification does not mean deregulation.”
23 October 2025 [France] – Paris Judicial Court rules on greenwashing allegations against TotalEnergies
The Paris Judicial Court ruled that TotalEnergies engaged in misleading commercial practices in diffusing on its website messages based on allegations it aimed to achieve carbon neutrality by 2050 and be a major actor of the energy transition, which are likely to mislead consumers about the scope of the group’s environmental commitments [the ruling is available here in French]. However, the allegations made by the claimants concerning the use of deceptive commercial practices in relation to fossil gas and biofuels are dismissed. The Court ordered TotalEnergies to pay €8,000 in damages for moral prejudice to each of the three claimant NGOs, to cease disseminating the misleading messages on its website, to publish the Court’s ruling for 180 days and to pay €15,000 in legal fees.
Italy
8/10 October 2025 [Italy] – The Italian Government published a draft Legislative Decree to implement the Basel Framework including on ESG risks
The Italian Government adopted and submitted to the Chamber of Deputies a draft Legislative Decree amending the Italian Banking Act to implement the Sixth Capital Requirements Directive (CRD VI) and the Third Capital Requirements Regulation (CRR III) [full text available here, in Italian].
In line with the CRD VI, the draft Legislative Decree introduces, among other things, the possibility for the Bank of Italy, within its supervisory powers, to adopt specific measures vis-à-vis one or more credit institutions or the whole Italian banking system including imposing requirements to reduce short, medium, and long term-risks arising from environmental, social, and governance (ESG) factors.
16 October 2025 [Italy] – New guidance for the board of statutory auditors of Italian listed companies on ESG supervision
On October 16, 2025, the National Council of Chartered Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti ed Esperti Contabili – CNDCEC) and the National Foundation of Chartered Accountants (Fondazione Nazionale Commercialisti – FNC) published new guidance addressed to the boards of statutory auditors (collegi sindacali) of listed companies concerning their enhanced responsibilities in sustainability supervision [available here, in Italian].
The purpose of the document is to align the role of the board of statutory auditors and the CNDCEC’s Standards of Conduct for Boards of Statutory Auditors with recent EU and Italian sustainability regulatory developments, in particular the Corporate Sustainability Reporting Directive (CSRD) and Legislative Decree No. 125/2024 (implementing the CSRD).
The new guidance includes specific measures to ensure that statutory auditors, in proportion to the size, complexity, and risk profile of the company:
- ensure that the company’s internal control and risk-management systems explicitly address ESG risks, identifying, evaluating, and monitoring them;
- verify that sustainability-related strategies are consistent with the company’s financial soundness;
- assess that sustainability reporting meets regulatory standards and stakeholder expectations, ensuring adequate information flows with the board of directors, internal control functions, the accounting firm, and the sustainability manager (if any);
- assess the adequacy of the organisational structure to guarantee resources, skills, and procedures suitable for pursuing and monitoring sustainability objectives and reporting thereof, with a focus on ensuring coordination with the sustainability, control and risk, appointments, and remuneration committees;
- verify the independence and professionalism of the sustainability assurance services providers, monitor their activities, and report the results to the shareholders’ meeting and the board of directors; and
- carry out a self-assessment including verification of their competence on sustainability issues and appropriate training, recognising that only a board with adequate awareness and preparation can effectively act as a guarantor of sound corporate governance that integrates ESG factors.