European Union

But less red tape, perhaps

Jian G was found guilty of acting as an agent for a Chinese intelligence service while working for Maximilian Krah, a member of the far-right Alternative for Germany

In today's edition: Chip's Act 2.0 chatter, digitalisation principles

Von der Leyen did not specify where the money was coming from

In today's edition: Pharma package, NGOs, and German long-term care insurance

AMENDMENTS 1 - 371 - Draft report Military mobility
Committee on Security and Defence
Committee on Transport and Tourism
Roberts Zīle, Petras Auštrevičius

Source : © European Union, 2025 - EP

AMENDMENTS 372 - 644 - Draft report Military mobility
Committee on Security and Defence
Committee on Transport and Tourism
Roberts Zīle, Petras Auštrevičius

Source : © European Union, 2025 - EP

As part of its efforts to increase European competitiveness, the European Commission adopted a simplification package, the Omnibus I, in February 2025. This covers several areas, such as sustainable finance rules, due diligence reporting and the carbon border adjustment mechanism, among others.

In today's edition: EU-Morocco, soils, food prices

In today's edition: Palm oil, switchgear, omnibus fights

The new investment roadmap will double climate adaptation funding, while targeting lower energy prices and slashing red tape

AMENDMENTS 1 - 285 - Draft report Recommendation for the Council, the Commission and the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy on the EU’s diplomatic strategy and geopolitical cooperation in the Arctic
Committee on Foreign Affairs
Urmas Paet

Source : © European Union, 2025 - EP

KS and KD v Council and Others
Eulex Kosovo mission: the General Court dismisses the action for damages brought against EU institutions and an EU body

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Michel Barnier, the EU’s chief Brexit negotiator, kept a secret diary of the talks.

Published in 2021, it revealed in painful detail why Britain lost so badly at the negotiating table. Jonathan Powell, former Downing Street chief of staff, summed it up. Britain was left with:

“a flawed withdrawal agreement and a deeply disadvantageous future relationship, both of which will cause us major problems for decades to come.”

Barnier’s account highlights five key reasons.

1. Prepared vs unprepared: Barnier mastered every detail. Britain’s first Brexit Secretary, David Davis, turned up empty-handed. Barnier was shocked by his “nonchalant” approach.

2. EU unity: The EU27 stood together. Britain tried to bypass Barnier by approaching individual states, but was repeatedly sent back to him.

3. Clarity vs chaos: The EU knew what it wanted. Britain was consumed by internal arguments. Barnier wrote that Theresa May spent more time negotiating with her own ministers than with Brussels.

4. Johnson’s failed “mad man” strategy: Attempts to provoke or threaten the EU backfired. In 2020 David Frost cancelled talks, then humiliatingly returned a week later.

5. The deadline trap: Theresa May triggered Article 50 without a plan. Boris Johnson agreed to a border in the Irish Sea despite knowing what it meant. At one point Barnier had to explain to MPs that “the health of cows cannot be checked by drone.”

Barnier’s diary makes one thing clear. Britain was out-negotiated at every turn. And the consequences are still with us. Britain and Britons were far better off when we were in the EU.

• We had full access to the world’s largest single market.
• We had a seat at the table shaping the rules.
• We enjoyed freedoms and protections now lost, from cheaper food and travel to stronger rights at work.

Some Leave voters now say they did not get the Brexit they wanted. But nobody voted for a version of Brexit. That was not on the ballot paper. People who voted Leave could not know what they would get.

Now many of them, along with most of the country, regret the reality we ended up with.

As Jonathan Powell concluded, there should have been an inquiry into why Britain, once so proud of its diplomacy, was so utterly defeated.

Barnier’s diary may be the closest we will get.

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Source : © European Union, 2025 - EP

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Towards the 2025 EU–CELAC Summit: Academics and diplomats debate the future of the bi-regional partnership[1]

On 9–10 November 2025, the 4th European Union (EU)–Community of Latin American and Caribbean States (CELAC) Summit is taking place in Santa Marta, Colombia, bringing together European, Latin American and Caribbean Heads of State and Goverment to  strengthen bi-regional relations. This mechanism constitutes the main forum for dialogue and cooperation between Europe and the states of Latin America and the Caribbean (LAC) and is the continuation of the EU–LAC summits held since 1999.

Today, EU–LAC relations unfold within the context of a structural crisis of the international system, marked by the decline of the liberal international order, the fragmentation of global trade, and growing strategic rivalry between the United States (US) and China in key sectors such as technology, energy and supply chains. Since the 2008 financial crisis and the 2015 Brexit referendum, illiberal and protectionist trends have intensified, while Donald Trump’s second term has deepened these dynamics through unilateral tariffs on countries and strategic sectors. The EU has responded with an “open strategic autonomy” agenda, combining the green and digital transitions with industrial policies and economic security, while LAC seeks to diversify its ties and advance green and digital reindustrialisation processes, despite structural fragilities and a recent decline in foreign direct investment[2]. This scenario presents both challenges and opportunities to revitalise a bi-regional relationship that, despite a long-standing record of cooperation and political dialogue, has gone through extended periods of stagnation and mutual loss of relevance compared with other actors such as China and Russia[3].

To foster debate ahead of this high-level meeting, on 23 May 2025, the Université Libre de Bruxelles (ULB) hosted a roundtable entitled Beyond the 2025 EU–CELAC Summit: Shaping the Future of EU–Latin America Relations. The event aimed to encourage dialogue between researchers and policymakers, bringing together academics who participated in the European Union in International Affairs (EUIA) conference, along with EU officials and LAC diplomats.

Organised by Arantza Gomez Arana (Northumbria University, UK), Bruno Theodoro Luciano (ULB and UNU-CRIS, Belgium) and Damián Rodríguez (University of the Republic, Uruguay), and with the support of the University Association of Contemporary European Studies (UACES), the event opened with a keynote by Professor José Antonio Sanahuja (Complutense University of Madrid, Spain), who analysed the complex geopolitical and geoeconomic context surrounding the 2025 EU-CELAC Summit. He stressed that, after a period of “polycrisis” within the EU and accelerated change in the international system, Donald Trump’s re-election has brought a dynamic of contestation to the liberal order, affecting both transatlantic alliances and the development strategies of both regions. In this context, the EU faces the challenge of redefining its integration model and external projection, while simultaneously advancing the green and digital transitions, reinforcing strategic autonomy, and strengthening the resilience of its value chains. However, this process takes place amid internal tensions and macroeconomic constraints, as well as a global environment marked by intensifying US-China rivalry and the risk of economic fragmentation and trade wars.

Sanahuja argued that the bi-regional relationship must be reframed around mutual interests and tangible results, moving away from the traditional asymmetric logic. Through initiatives such as the Global Gateway initiative and the conclusion and implementation of trade agreements -including the EU–Mercosur, EU–Mexico[4] and EU–Chile agreements- the EU seeks to diversify partnerships and secure critical inputs, while LAC requires access to finance, technology transfer and industrialisation. He warned that the success of this agenda will depend on the ability to coordinate positions in multilateral forums, avoid having CELAC’s internal divisions undermine the relationship, and seize the current window of opportunity to build shared strategic autonomy. In his view, the Santa Marta Summit should not be framed as “against” Trump, but rather as an opportunity to avoid falling into his polarising game and to project an open space based on rules and mutual benefits for both regions.

The second part of the event brought together high-level academic and diplomatic voices. Participants included Anyurivet Daza Cuervo, Minister Plenipotentiary of the Embassy of Colombia; Detlef Nolte, Professor at the German Institute for Global and Area Studies (GIGA); María García, Professor at the University of Bath (UK); Renata Zilli, Researcher at the European Centre for International Political Economy (ECIPE); and Eduardo Pereira e Ferreira, Minister-Counsellor at the Mission of Brazil to the EU. Each contributed with complementary perspectives on the challenges and opportunities in the bi-regional relationship, from diplomacy and trade to global governance and sustainable development strategies.

The roundtable concluded with an exchange between speakers and participants (academics and students from different nationalities), allowing for a deeper exploration of areas of convergence and the pending challenges to strengthening EU-LAC relations. Participants agreed on the importance of promoting sustained dialogue, encouraging bi-regional research, and exploring synergies between academia and policymaking. The organising team expressed its interest in continuing work on this agenda and in assembling panels for future conferences and international events. Those interested in engaging with these topics or collaborating are warmly invited to get in touch with the organisers, as we aim to expand the network of experts and stakeholders committed to the future of EU-LAC relations.

 

[1]García, M.J. and Gomez Arana, A., 2022. Latin America-European Union relations in the twenty-first century.

[2] Sebastião D. and Luciano B.T.(2023). ‘Moving from EU-centrisms: Lessons from the polycrisis for EU studies and Global South regionalism’ inJournal of Contemporary European Research,19(2): 226-245.https://doi.org/10.30950/jcer.v19i2.1297

[3]Sanahuja, J.A. and Rodríguez, J.D., 2022. Twenty years of EU–MERCOSUR negotiations: Inter-regionalism and the crisis of globalisation. In Latin America–European Union relations in the twenty-first century (pp. 117-153). Manchester University Press.

[4] Proposed for adoption by the European Commission on the 3rd of September https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1644

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An article, published on 8 September 2025 in the Kyiv Independent, brandished the headline: ‘Russia’s gains speed up in Ukraine ahead of high-stakes autumn’. Relying on open-source data, the analysis showed how the average pace of Russia’s advances in Ukraine in 2025 far outweigh those in 2024. Indicatively, Russia captured 363 km2 of Ukrainian territory in August 2024 as opposed to 464 km2 last month, in August 2025.

Figure 1 – The infographic summarising Russia’s monthly advances, as shared in the Kyiv Independent article published on 8 September 2025.

To make matters worse, according to some intel from the battlefield, the Russian armed forces are moving 150,000 troops, backed by columns of armour, to the frontline in Pokrovsk. These valuable reinforcements will inevitably lead to the deterioration of the situation at the front, with dispatches from the besieged stronghold of Pokrovsk suggesting the Ukrainian forces ‘are almost encircled’. The collapse of Pokrovsk, a strategic logistics and economic hub, would put pressures both on the Ukrainian military and the embattled Ukrainian economy.

Non-experts on the Eastern Mediterranean would be bemused to hear that this region, which only neighbours the Black Sea, maintains decisive influence on the course of events in the Ukrainian battlefield. Yet the Eastern Mediterranean has maintained a critical, even if overlooked, role in influencing the fate of military operations on the Ukrainian theatre. How could this be? I hear you asking.

The main connecting link lies in the trade of energy. Recent evidence shows the significant extent to which the European Union has subsidised the Russian wartime economy, and, therefore by proxy, the Russian armed forces. These statistics show that EU member states alone have funnelled more than €210 billion into Russia through the purchase of fossil fuels between 24 February 2022 and 24 July 2025.

By comparison, the EU plus the UK and EFTA (Iceland, Liechtenstein, Norway, and Switzerland) contributed €167 billion to Ukraine in the form of military and financial assistance in a similar period, from 24 January 2022 to 30 June 2025.

These valuable revenue flows have enabled Russia to sustain its push on the battlefield. They have enabled the Kremlin to purchase valuable defence components on the global market, replace lost equipment, accelerate the development of weapon innovations, and source domestic and foreign hired guns. The latter has meant that, while Russia has been losing personnel at exorbitant rates, the Russian military has been able to replenish those loses and keep pushing in the battlefield. Best attesting to this is the fact that the Kremlin has avoided the need for a second partial, let alone a full, mobilisation, which would threaten regime stability.

The Eastern Mediterranean has played a crucial role in these energy flows’ continuity. While additional jurisdictions, like China and India, have become important intermediaries in the sale of Russian fossil fuels amidst western sanctions, the Eastern Mediterranean state of Türkiye has best leveraged the region’s proximity to the European market.

Benefiting from reduced logistics costs due to the short distance, Türkiye emerged as the world’s largest buyer of Russian oil products in 2023. With increases in domestic consumption being unable to account for such surges in fuel imports, the safe conclusion is that Türkiye has been a ‘strategic pitstop’ enabling the circumvention of western sanctions. Concurrently, the TurkStream pipeline remains the sole active pipeline feeding Russian natural gas into Europe.

This explains why the US President, Donald Trump, has proposed placing American secondary sanctions on Russian oil if Europe initiates. While some have called this a stalling tactic, a unilateral US sanction would likely do more to harm the American economy while Europe continues to buy vast volumes of Russian fossil fuels.

The fact that this proposal come from the US also reveals the precarious position Europe has placed itself in. While European leaders have been quick to pronounce that they are ready to do ‘whatever it takes’ for Ukraine, in reality they have failed to heed to a US warning that emerged as early as 2014.

Following Russia’s annexation of Crimea, (most) NATO member states (re)securitised Russia as a national security threat. This prompted the US to publicly encourage Europe to close its most significant security vulnerability: the continent’s dependence on Russian energy. One of the core propositions that accompanied the US position on European energy security has been to exploit the Eastern Mediterranean as a most suitable alternative supplier. This position became codified in 2019 in the ‘Menendez-Rubo Act’, co-sponsored by then Senator and current Secretary of State, Marco Rubio. Beyond the region’s proximity to the European market, two EU member states – Cyprus and Greece –, amongst others in the region, maintain sizable hydrocarbon reserves. This reaffirms the Eastern Mediterranean’s suitability.

Yet, at the face of military threats by no other than Türkiye, the EU has been unable to offer the protective umbrella to Cyprus and Greece necessary to salvage European energy security.

As a result, the EU has failed to arrest its energy imports from Russia even after nearly four years since Russia begun its invasion. The REPowerEU policy – EU’s response to this conundrum – only emerged three months after the full-scale invasion commenced and does not envisage the full phasing out of Russian energy until at least 2027. By that time, if the war drags on, Russia will have been waging an effectively EU-subsidised war on Ukraine for five years.

In the absence of decisive action to leverage the Eastern Mediterranean hydrocarbon reserves, the EU will continue to situate itself between rock and a hard place. Instantly stopping Russian energy imports would cripple the embattled European economies. Before Germany bypassed its own sanctions by indirectly importing Russian gas mainly through France, key German executives spoke of the ‘permanent damage’ to Germany’s economy from the energy crisis. Continuing to buy Russian fuel will of course lead to more Ukrainian deaths in the battlefield and beyond.

Yet, despite the challenges and the collective EU’s inaction, some, but nonetheless important, progress has been made in the Eastern Mediterranean, which further reaffirms the region’s potential. The Greek Alexandroupolis LNG terminal’s construction has enabled non-Russian gas to flow into Central, Eastern, and Southern Europe, including Ukraine.

The logistics of the endeavour further reiterate the prospect for energy to play a necessary role in bringing about lasting stability and peace in the Eastern Mediterranean. While Egypt is the world’s seventh largest natural gas producer, domestic demand means that it heavily relies on Israeli imports to conduct its exporting business. Amidst interminable turmoil in the Eastern Mediterranean, this is an encouraging sign for the region. Importantly, it builds on the East Mediterranean Gas Forum’s establishment in 2021, which includes both Israel and the Palestinian Authority along with six other regional states. The Gaza Marine hydrocarbon reserves, which remain intact, mean that they can be used to reconstruct Gaza and develop the West Bank once hostilities end.

Undoubtedly, the continued use of fossil fuels leads to environmental concerns. Paradoxically, exploiting these natural gas reserves can lead to an end to highly polluting instances of warfare. It could have also prevented warfare in the past. Beyond rescuing European energy security and the war in Ukraine, unleashing the Eastern Mediterranean’s energy potential will reaffirm its potential as a global strategic conduit.

A memorandum signed at the G20 in New Delhi in 2023 between the US, Saudi Arabia, the EU, the UAE, France, Germany, Italy, and India resolves to establish the ‘India-Middle East-Europe Corridor’ (IMEC). The Eastern Mediterranean is a critical and necessary conduit in this strategic initiative to counter China’s economic, cultural, and political influence through the parallel Belt and Road Initiative (BRI). Similarly, energy constitutes an important, albeit merely one, IMEC dimension.

Figure 2 – A visualisation of the strategic projects associated with ‘IMEC’, which includes energy infrastructure passing through the Eastern Mediterranean

If the EU is seriously interested in doing whatever it takes, then ensuring the development of the Eastern Mediterranean plan occurs unimpeded is the best next step. For academics, the highly consequential linkages between the Eastern Mediterranean, European energy security, and Ukrainian military security expose the increasing interconnectedness between security sectors and regions in a globalised world where international competition is on the rise.

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This publication builds on the paper “Sustainable Finance at an Inflection Point: The EU Taxonomy and its Impact” presented at the “EU Law and Policymaking” panel of the UACES Graduate Forum Research Conference, held at Panteion University of Social and Political Sciences, Athens, Greece (29–30 May 2025). The support of UACES in organising and facilitating my participation in the conference is gratefully acknowledged.

Abstract

What counts as “sustainable” in the EU? The answer is not just political, but increasingly codified through technocratic tools. This article examines the EU Taxonomy for Sustainable Activities as a key instrument of sustainability governance. Originally developed to steer green finance and prevent greenwashing, the taxonomy now plays a constitutive role by establishing the fundamental classification system that defines Europe’s green technological trajectory. Its scientific and technical logic, designed to create market clarity, provides a coordinative framework that aligns investment, industrial policy, and research priorities. Drawing on debates in innovation studies and institutional economics, this article argues that the EU Taxonomy functions as a de facto industrial policy instrument, creating a coordinated selection environment that shapes Europe’s green technological trajectory.

 

Introduction: Defining Sustainability, the EU Way

The global financial landscape is undergoing a profound transformation: concerns about climate change and environmental degradation are increasingly redirecting capital towards sustainable investment. This shift is particularly striking in Europe. The European Union (EU) aims to achieve net zero by 2050 under the European Green Deal, with member-states rallying behind this vision. The EU Taxonomy has emerged as “a cornerstone of the European Union’s sustainable finance framework and an important market transparency tool.” Enacted through Regulation (EU) 2020/852 in 2020, the green rulebook establishes a rigorous, science-based system to classify environmentally sustainable economic activities. Yet the sustainability classification system’s influence extends far beyond its original financial transparency mandate. What began as a tool to prevent greenwashing in capital markets has gradually evolved into an instrument that shapes innovation priorities, industrial policy, and research funding across Europe

This analytical puzzle raises a fundamental question: How does the EU Taxonomy shape technological innovation and industrial development in Europe? This article argues that the EU Taxonomy exerts its influence by structuring a “coordinated selection environment” (Nelson & Winter, 1982) – a framework of incentives and signals that guides the decisions of innovators, investors, and policymakers. It does so by establishing the foundational technical criteria that regulations like the Sustainable Finance Disclosure Regulation (SFDR), institutions like the European Investment Bank (EIB), and policies like the Net Zero Industry Act (NZIA) incorporate. In doing so, it creates a coordinated selection environment that powerfully structures economic and innovative activity around its classification of sustainability.

The discussion argues that by defining the boundaries of “sustainable” activity, the Taxonomy shapes “technological paradigms”: the shared cognitive frameworks that guide search activities within innovation communities (Dosi, 1982). This science-based classification system aligns the incentives of investors, firms, and policymakers, thereby structuring the development and selection of green technologies and fundamentally orienting Europe’s industrial trajectory.

 

What Is the EU Taxonomy, and Why Was It Created?

The concept of sustainable finance has long faced definitional challenges. In 2008, Sandberg et. al. identified fundamental heterogeneity in Socially Responsible Investment (SRI), describing it as “terminological, definitional, strategic and practical.” While acknowledging that SRI was the predominant term for investments integrating social, ethical, environmental, and corporate governance concerns, the scholars expressed scepticism about standardization unless implemented through top-down regulation. This definitional ambiguity persisted, with Strauß noting in 2021 that “the discussion about SF lacks consistency and a common understanding of SF.”

The European Commission (EC) acknowledged that achieving sustainable finance objectives required “a common language and a clear definition of what is ‘sustainable'” (EU, 2020). EUR-Lex (2021) offered a broad definition of sustainable finance as “the process of taking due account of environmental, social and governance (ESG) considerations when making investment decisions in the financial sector, leading to increased longer-term investments into sustainable economic activities and projects.” However, this definition, while highlighting the importance of environmental factors in investment decisions, lacked specific criteria for measuring sustainability.

The introduction of the EU Taxonomy marked a significant shift toward technical precision. As outlined in Regulation (EU) 2020/852, this classification system establishes concrete criteria for environmentally sustainable economic activities. The regulation targets six key environmental goals: mitigating climate change, adapting to its effects, ensuring the sustainable management of water and marine ecosystems, advancing a circular economy, preventing and controlling pollution, and protecting and restoring biodiversity and ecosystems. To qualify, an activity must meet four key criteria: it must make a substantial contribution to one of the environmental goals, avoid significant harm to the others, comply with safeguards, and meet technical screening criteria. This transformation represents a fundamental shift from principles-based to rules-based regulation, replacing interpretative flexibility with science-based technical specifications. The EU sustainability assessment framework functions as a comprehensive checklist that defines what counts as an “environmentally sustainable activity” for investment and policy purposes – a seemingly technical exercise with far-reaching consequences.

The shift in terminology from “sustainable finance” to “EU Taxonomy” represents a significant rhetorical evolution with important implications for governance approaches. The term “sustainable finance” evokes normative goals and principles, emphasizing the purpose of financial activities. In contrast, “taxonomy” carries scientific and technical connotations, suggesting objective classification based on empirical criteria. However, despite the technical framing, normative judgments remain embedded throughout the taxonomy. The selection of environmental objectives, the thresholds for “substantial contribution,” and the accommodation of transitional activities all reflect value judgments about environmental priorities and the appropriate pace of sustainability transitions.

 

From Finance to Innovation: When Classification Becomes Direction

The expansion of EU’s sustainability assessment tool from financial classification to broader policy influence is significant, because it demonstrates how technical standards can become powerful instruments of economic steering. Rather than remaining neutral tools, classification systems like the Taxonomy actively shape which technologies receive investment, which research priorities get funded, and which industrial strategies governments pursue.

 

Capital Coordination and Market Formation

The EU Taxonomy’s most direct impact lies in its capacity to align investment flows across public and private sectors. Originally designed to provide clarity for financial market participants under the SFDR, the green classification system has established mandatory disclosure requirements for large financial institutions. The European Banking Authority has noted substantial engagement with the green rulebook’s criteria across the EU banking sector, with institutions reporting significant exposure to both green rulebook-aligned and non-aligned activities in their climate risk assessments. EIB has integrated sustainability assessment tool’s criteria into its lending decisions, effectively making compliance a prerequisite for accessing Europe’s largest source of public investment capital. This alignment mechanism transforms the green rulebook from a mere classification tool into what a “market-shaping” instrument that actively constructs the boundaries of legitimate sustainable investment (Mazzucato, 2021).

 

The New Architecture of Industrial Policy

While the EU Taxonomy was originally designed as a classification system for environmentally sustainable economic activities, its influence extends beyond financial markets into broader policy and research frameworks. The Green Deal Industrial Plan, unveiled in February 2023, does not directly cite the EU sustainability assessment framework. Yet, its entire architecture is built upon the same strategic logic and targets the same sectors. The Plan identifies “net-zero technologies” – including batteries, windmills, heat pumps, solar, electrolysers, and carbon capture and storage – as its core priorities. This list is not arbitrary; it is a direct reflection of the economic activities designated for climate change mitigation within the EU green rulebook (Annex I to Regulation 2020/852). The Plan operates on this pre-defined policy environment, focusing on accelerating production and competitiveness in sectors already validated by the Taxonomy’s scientific screening criteria. This alignment demonstrates how the sustainability assessment framework has helped establish a common understanding of strategic green technologies, which indirectly informs the selection of sectors for industrial development.

NZIA (2023) and the Critical Raw Materials Act (CRMA) (2024) similarly focus on key technologies and raw materials that underpin decarbonization and green innovation. While these policies do not explicitly cite the Taxonomy, they operate within the same sustainability-oriented policy environment that the Taxonomy helps define. The Net Zero Industry Act (2023) establishes manufacturing targets for “net-zero technologies” that closely mirror the green rulebook’s-eligible activities. CRMA aims to ensure a secure and sustainable supply of raw materials critical for strategic technologies. The list of these technologies: permanent magnets, batteries, fuel cells, solar panels, wind turbines, and electrolysers, directly mirrors the technologies and economic activities deemed strategic and sustainable under the Taxonomy’s climate mitigation objectives (Annex I to Regulation 2020/852). In these cases, the sustainability assessment framework functions less as a legal mandate and more as a normative and technical reference point, shaping the boundaries of strategic industrial and technological activity in Europe.

Thus, critical raw materials strategies, renewable energy deployment targets, and clean technology manufacturing incentives are increasingly aligned with the same environmental objectives that the EU Taxonomy codifies, creating a powerful ‘landscape pressure’ – a broad macro-level impetus – that shapes industrial development pathways (Geels, 2014). While these policies do not formally reference the green rulebook, they operate within the broader sustainability framework that the sustainability assessment framework defines.

The Taxonomy contributes towards shaping norms and expectations around sustainable activity that anchor the EU’s industrial strategy. Policies may not reference it directly, because they are already operating within the framework of sustainable economic activity that the EU sustainability framework codified into law. This integration represents a significant departure from traditional industrial policy approaches, where governments typically selected strategic sectors based on economic competitiveness or national security considerations. Instead, the Taxonomy’s technical criteria now provide the scientific and regulatory foundation for industrial strategy.

 

Shaping Technological Paradigms and Innovation Pathways

Beyond capital and policy, the Taxonomy also influences research and innovation funding. Horizon Europe, the EU’s flagship research program, prioritizes projects that contribute to climate action, environmental sustainability, and the Green Deal objectives. Its strategic plan (2025–2027) earmarks significant shares of funding for climate-related activities and biodiversity projects, effectively incentivizing research aligned with EU environmental objectives. While the program does not explicitly require applicants to reference the green framework, its priorities reflect the broader sustainability and Green Deal framework.

In practice, this means that successful proposals increasingly need to demonstrate how their activities contribute to decarbonization, ecosystem preservation, or the circular economy, echoing the classification logic of the Taxonomy. In this sense, the green rulebook functions as a definitional framework that indirectly guides the direction of EU-funded research, shaping innovation priorities even at the earliest stages of project conception. This creates a powerful “selection environment” (Nelson & Winter, 1982) that steers R&D toward Taxonomy-eligible pathways. The alignment also illustrates a broader pattern: the EU is using technical standards not just to regulate markets but to actively steer research and innovation trajectories, creating positive feedback loops between policy, funding, and technological development.

Yet, this function is dual-edged. While it creates momentum for aligned technologies (e.g., stimulating R&D in green hydrogen, which meets the Technical Screening Criteria (TSC)), it also risks creating path dependency. The novel classification system is in not only “opening up,” but also “closing down” innovation pathways (Stirling, 2008). Despite rhetoric about technology neutrality, the Taxonomy’s specific criteria inevitably privilege certain technical solutions over others. Technologies that are not (yet) recognized by the EU sustainability framework, or that represent a more radical departure from the status quo, may find it harder to attract funding and attention. Furthermore, the contentious inclusion of nuclear power demonstrates that achieving green rulebook alignment is a key strategy for technologies to secure long-term viability, influencing not just current investment but future R&D portfolios.

 

Conclusion: Classifications That Shape Futures

The EU Taxonomy’s journey from a narrow financial tool to a broad-based governance instrument reveals a core mechanism of modern economic steering: the use of technical standards to orchestrate complex transitions. This analysis has argued that the sustainability classification system’s power derives not from direct mandate but from its role as a constitutive framework – one that actively creates new realities and categories – that creates a coordinated selection environment. By providing a coherent and sanctioned guidance on sustainable activity, it aligns the incentives of investors, public banks, and industrial policymakers. This environment, in turn, shapes technological paradigms (Dosi, 1982), steering R&D and industrial strategy toward Taxonomy-aligned pathways.

Ultimately, the EU Taxonomy demonstrates that today governance is increasingly exercised through the quiet power of classification. The ongoing evolution of its TSC will therefore remain a central, and intensely political, process in determining the structure of the European green economy

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