By Argi Sampedro
Despite strong performances by right-leaning and Euroskeptic parties, we don’t expect the results will significantly hinder the EU’s transition to net-zero.
Europe’s election season has been full of surprises: This year’s European Parliament elections have sent unprecedented shockwaves across Brussels and EU Member States, and the relatively poor performance of ruling parties in Germany and France has left the legitimacy of both governments hanging by a thread, culminating in a historic snap election in France that could render the country ungovernable for months to come. But what might it all mean for climate policy?
Leading up to the EU elections, many speculated that a far-right win in the Parliament could jeopardize the European Green Deal, adopted in 2020 by the European Commission to help the EU achieve its decarbonization goals. Yet, last month’s outcome proved different: While some far-right parties made significant gains, the real winner was the center-right European People’s Party (EPP), a group which-alongside the Socialists, the liberal Renew Europe group, and potentially the Greens-now has the opportunity to lead a centrist coalition with more than enough votes to pass climate legislation and keep the Green Deal’s ambitions alive.
In light of these events, we don’t anticipate a wholesale rollback on climate policy. In our view, climate and energy initiatives still have significant momentum in the EU, where even opposing parties generally support a broader, sustained effort to lower energy prices, increase energy security, and better compete against Chinese clean energy subsidies and the U.S. Inflation Reduction Act. Legally binding commitments include a 55% reduction in carbon emissions by 2030, and achieving net-zero by 2050.
At the same time, we believe climate advocates still have their work cut out: Getting the EPP on board likely will demand navigating ideological sensitivities within the centrist coalition regarding issues such as Carbon Capture and Storage (CCS), the ICE vehicle ban by 2035, and agricultural regulation on the use of pesticides. The French political stalemate could also affect EU decision-making, particularly on key budgetary decisions to fund the transition, as well as on national implementation.
If, as expected, Ursula von der Leyen is reappointed as European Commission President next week, we believe underlying momentum for climate policy will remain strong. While compromises may be necessary on the road to net-zero, and key decisions may take longer to make, we don’t expect the recent elections will ultimately lead to a significant change of direction in Brussels.
This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice. This material is general in nature and is not directed to any category of investors and should not be regarded as individualized, a recommendation, investment advice or a suggestion to engage in or refrain from any investment-related course of action. Investment decisions and the appropriateness of this material should be made based on an investor’s individual objectives and circumstances and in consultation with his or her advisors. Information is obtained from sources deemed reliable, but there is no representation or warranty as to its accuracy, completeness or reliability. All information is current as of the date of this material and is subject to change without notice. The firm, its employees and advisory accounts may hold positions of any companies discussed. Any views or opinions expressed may not reflect those of the firm as a whole. Neuberger Berman products and services may not be available in all jurisdictions or to all client types. This material may include estimates, outlooks, projections and other “forward-looking statements.” Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed.
Discussions of any specific sectors and companies are for informational purposes only. This material is not intended as a formal research report and should not be relied upon as a basis for making an investment decision. The firm, its employees and advisory accounts may hold positions of any companies discussed. Specific securities identified and described do not represent all of the securities purchased, sold or recommended for advisory clients. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. Any discussion of environmental, social and governance (ESG) factor and ratings are for informational purposes only and should not be relied upon as a basis for making an investment decision. ESG factors are one of many factors that may be considered when making investment decisions.
Commodity futures and forward contract prices are highly volatile, and the commodity markets can also lack sustained movements of prices in one direction, whether up or down, for extended periods. Participation in a market that is either volatile or trendless could produce substantial losses. Price movements of commodity interests are influenced by, among other factors: changing supply and demand relationships; governmental, agricultural and trade programs and policies; climate; and national and international political and economic events. None of these factors can be controlled by the manager.
Investing entails risks, including possible loss of principal. Investments in hedge funds and private equity are speculative and involve a higher degree of risk than more traditional investments. Investments in hedge funds and private equity are intended for sophisticated investors only. Indexes are unmanaged and are not available for direct investment. Past performance is no guarantee of future results.
This material is being issued on a limited basis through various global subsidiaries and affiliates of Neuberger Berman Group LLC. Please visit www.nb.com/disclosure-global-communications for the specific entities and jurisdictional limitations and restrictions.
The “Neuberger Berman” name and logo are registered service marks of Neuberger Berman Group LLC.
© 2009-2024 Neuberger Berman Group LLC. All rights reserved.
Original Post
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Read the full article here