Europe’s Green Deal ambitions face harsh fiscal realities

An ambitious vision… with no map

As the EU presses ahead with the next wave of the Green Deal – dubbed “Green Deal 2.0” – the political rhetoric suggests full steam ahead. But according to Knubben, the reality on the ground is far more complex.

“I’ve never attended so many high-level political meetings in my 16 years as I have since January,” he said. “Everyone’s talking about making Europe number one in everything – AI, quantum computing, sustainability. But while the ambition is there, the roadmaps are vague and the funding isn’t available.”

Knubben points to a widening rift between the Commission’s political leadership and the practical realities recognised by both member states and Commission staff. “We’ve got different layers clashing with each other. We have the cabinets of commissioners who pretend that everything is okay and we’re going to go ahead and nothing has changed. And then we have the member states, who seem to increasingly have a fundamentally different view, and we have commission staff that seem to have a more realistic view as well, and that internal clash is now impossible to ignore.”

From carrots to sticks

When asked whether the EU can afford its policy ambitions, Knubben was clear: “No.”

Without the fiscal space to incentivise green behaviours, governments are defaulting to punitive measures. “Take EVs – there’s no more money for subsidies. So now we’re seeing proposals for additional taxes on internal combustion engine vehicles instead,” he explained. “If you can’t entice, then you penalise – and that’s the direction we’re heading in.”

This shift from incentives to regulation reflects a broader strategy to push industry and consumers toward green compliance, often without the necessary support systems in place.

Omnibus reforms: promise or paralysis?

Knubben highlighted the EU’s Omnibus legislative process; a sweeping new regulatory initiative aiming to simplify, harmonise, and modernise rules across key areas like CSRD (Corporate Sustainability Reporting Directive) and taxonomy.

In theory, it’s a smart approach: bundle multiple legislative amendments into one package for more efficient passage. In practice? “It’s completely unprecedented,” said Knubben. “There are 13 Omnibus packages planned, but we’ve already seen Parliament and the Council layering in competing amendments. This could grind into years of procedural gridlock.”

While hopeful that some good may emerge, he warned, “Don’t bet on a smooth outcome by the end of the year.”

Regulatory overload and a lack of clarity

The broader industry sentiment, both in the EU and UK, is one of regulatory fatigue. “Yes, there’s regulatory overload,” Knubben acknowledged. “But the real issue isn’t just volume – it’s the ambiguity. For example, how do you report upstream CO₂ emissions for a Chinese battery when no one has the data? Not even the Commission has answers.”

This lack of clarity is particularly painful for asset finance firms that depend on data and systems alignment. “The assumption in Brussels is that banks are the most advanced tech savvy organisations on the planet. But in reality, even small changes to reporting systems take years to implement. When I try to explain this, I’m met with disbelief.”

Sustainability reporting: uneven playing field

Sustainability and ESG reporting obligations are among the most demanding areas for the industry. Knubben noted stark differences across asset classes: “It’s relatively easy to calculate emissions for cars or trucks with Type Approval data. But what about diggers or industrial machinery? We have no framework, no numbers – just obligations.”

Unsurprisingly, ESG compliance has become a growth area, at least for consultancies. “The fastest-growing departments in large leasing firms are ESG reporting teams. It’s a response to regulatory pressure, not commercial demand.”

The Trump effect: disruption without legislation

The return of Donald Trump loomed large in the discussion. Knubben noted: “He’s already had an impact. Just the tariff talk has disrupted supply chains – for parts, batteries, everything. It’s causing delays and increasing costs. Even without changing laws, the uncertainty is hitting hard.”

Europe can’t be the US, and that’s okay

In a provocative final exchange, Knubben responded to a challenge about how tech disruptors like Elon Musk might view the EU’s approach: “He’d probably get rid of three-quarters of the Commission. But here’s the thing – we keep pretending we want to be like the US, yet hold onto a hyper-regulated framework. That’s not possible. Europe needs to accept it can’t be both.”

Instead of chasing a transatlantic fantasy, Knubben advocates for a more realistic, balanced vision. “Maybe we just aim to be somewhere in the middle – not the US, but not frozen in bureaucracy either. But we’re not there yet.”

Conclusion: realism required

Knubben’s assessment is one of cautious realism. The EU’s regulatory machine is in full swing, but its fuel tanks – political cohesion, fiscal capacity, and operational clarity – are running low.

Without a recalibration between ambition and execution, Europe’s asset finance and leasing industry may be left carrying the burden of transition, without the tools to deliver it effectively.