Written by Marc Lütz
Dear reader,
Welcome back to the Publyon Sustainability Newsletter! This edition kicks off the new year with latest and most important news from the European sustainability front. As Cyprus takes the reins of the Council Presidency from Denmark, we dive into the bold 2040 climate targets, the full rollout of CBAM, and the pragmatic delays to deforestation rules. This edition explores how the EU is navigating the fine line between ambitious zero-pollution goals and the pressing need for industrial competitiveness and circular innovation.
Europe’s bold plan for sustainable growth, the “Clean Industrial Deal”, represents a major shift for EU businesses, especially in energy-intensive sectors. Don’t miss your chance to engage with the Commission to shape this deal and influence the policy direction for the next five years.
The spotlight
Cypriot Presidency has taken over from Denmark
On 1 January 2026, Cyprus took over the rotating Presidency of the Council of the European Union from Denmark, with a packed agenda for 2026. In a time marked by geopolitical instability, the Cypriot programme has a heavy focus on improving the EU’s strategic autonomy. To this end, Cyprus is committed to strengthening security and defence, boosting competitiveness and advancing the EU budget.
The Cypriot Presidency builds on the work carried out by the preceding trio presidencies of Poland and Denmark, particularly in the areas of defence, competitiveness and regulation. Not only do these areas reflect continuity across the trio, they also consistently cut across multiple Council configurations. When it comes to competitiveness and regulation, the Cyprus Presidency maintains a central focus on simplification. Building on Denmark and Poland, Cyprus plans on advancing the EU’s simplification agenda, including work on the Omnibus IV, V and VI packages, as well as new initiatives in digital policy, environmental regulation, food and feed safety and the automotive sector.
Some other key objectives for the Cyprus Presidency include reaching a general approach on extending the carbon border adjustment mechanism (CBAM) and the Competitiveness Fund, advancing the Automotive Package and Military Mobility Package. In addition, Denmark’s Presidency has left a few files for the Cypriots to continue work on. To start, Denmark was unable to secure the signature of the Mercosur trade agreement or conclude negotiations with the European Parliament on customs reform and starting interinstitutional negotiations on the Critical Medicines Act and on a common European system for migrant returns. Lastly, there is the work necessary to advance the ongoing discussions on the Multiannual Financial Framework (MFF), the EU’s next seven-year budget, which will continue beyond the Cypriot Presidency.
Impact analysis for your business
Our free updates keep you informed, but is that enough? With our tailored sustainability updates you’ll receive:
- Custom insights on how upcoming policy changes might impact your business;
- Strategic advice from your dedicated policy consultant on how to turn challenges into opportunities;
- Early warnings about key legislative developments.
Policy updates
EU zero-pollution goals at risk as implementation lags
On 29 January, a new mid-term review of the EU’s Zero Pollution Action Plan delivers a clear message: Europe’s pollution laws are ambitious, but progress depends on faster implementation. The report shows that cutting air, water and soil pollution brings immediate health gains, from fewer respiratory illnesses to improved mental health, and supports long-term competitiveness.
While air pollution and pesticide use are improving, other areas are moving in the wrong direction. Water pollution, waste, microplastics and noise remain major challenges. The Commission stresses that stronger enforcement, innovation and better coordination across sectors such as transport, agriculture and energy are now essential to keep the EU on track for its 2030 targets.
Parliament endorses 2040 climate target under European Climate Law
On 19 January, the European Parliament approved the provisional agreement amending the European Climate Law to introduce a binding 2040 target of a 90% reduction in greenhouse gas emissions, compared to 1990 levels. The agreement had been reached by co-legislators in December and marks a key milestone on the path to EU climate neutrality by 2050.
The revised law introduces additional flexibility in how the target can be met, including limited use of international carbon credits from 2036, greater scope for carbon removals, and enhanced flexibility across sectors. It also delays the launch of ETS2 by one year, to 2028.
JRC proposes EU-wide harmonised waste sorting labels under PPWR
On 13 January, The Commission’s Joint Research Centre published a proposal for EU-harmonised waste sorting labels under the Packaging and Packaging Waste Regulation. The aim is to make sorting easier for consumers while reducing fragmentation across national systems.
Drawing on behavioural research and citizen testing, the proposal recommends clear, flexible labels linking packaging materials to matching waste bins. The work will feed into upcoming implementing acts under the PPWR.
New EU rules on PFAS in drinking water enter into force
As of 12 January, new EU-wide rules requiring systematic monitoring of PFAS in drinking water have entered into force under the recast Drinking Water Directive. For the first time, Member States must track “forever chemicals” using harmonised methods and report exceedances and incidents to the Commission. Where limits are breached, authorities are required to act, from improving water treatment to restricting supplies, to protect public health. The measures mark a concrete step in delivering the EU’s Water Resilience Strategy and Zero Pollution goals.
CBAM enters definitive phase
As of 1 January 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM) has entered its definitive phase. Importers of carbon-intensive goods such as cement, steel, aluminium, fertilisers, electricity and hydrogen must now declare embedded emissions and purchase CBAM certificates linked to the EU ETS carbon price. The shift marks a major step in the EU’s climate policy, strengthening protection against carbon leakage while nudging global supply chains toward cleaner production.
EUDR: From political uncertainty to agreed delay and simplification
Since December, the EU has agreed a targeted revision of the EU Deforestation Regulation to ease implementation. The main change is a further postponement of due-diligence obligations, now applying from 30 December 2026 for large operators and 30 June 2027 for micro and small companies.
The revision also clarifies supply-chain responsibilities, making the first operator placing a product on the EU market solely responsible for submitting the due-diligence statement. These changes reduce administrative burden while preserving the Regulation’s core environmental objectives.
Commission launches circular economy package to support plastic recycling
On 19 December, the European Commission unveiled a new package of pilot measures to accelerate the circular economy, with a strong focus on the plastics sector. The package aims to support struggling EU recyclers, reduce market fragmentation and strengthen competitiveness, while preparing the ground for a broader Circular Economy Act in 2026.
Key measures include draft EU-wide end-of-waste criteria for plastics, clarifying when recycled plastics can circulate freely on the Single Market, and new rules on recycled content in PET bottles, including the role of chemical recycling. The Commission also announced steps to improve fair competition with imports, boost investment in recycling, and evaluate the Single-Use Plastics Directive.
Commission unveils environmental simplification package
On 10 December, the European Commission presented a package to simplify environmental legislation in areas including industrial emissions, circular economy and permitting. The measures aim to cut red tape, speed up approval processes for strategic projects, and reduce administrative burdens for businesses, while maintaining environmental and health protections.
Key elements included streamlined permits, simplified industrial emissions requirements, temporary relief from certain EPR obligations for EU producers, and improved digital tools. The proposal is now with the European Parliament and the Council.
